FP Green BRT Karachi · 2020-02-01 · It will benefit Karachi’s population of 14.9 million through increased access to safe, reliable, and affordable public transport. Benefits

FP085: Green BRT Karachi

Pakistan| Asian Development Bank (ADB) | Decision B.21/34

28 November 2018

Project/Programme Title: Green BRT Karachi

Country/Region: Pakistan

Accredited Entity: Asian Development Bank

Date of Submission: 25/06/2018

Contents Section A PROJECT / PROGRAMME SUMMARY Section B FINANCING / COST INFORMATION Section C DETAILED PROJECT / PROGRAMME DESCRIPTION Section D RATIONALE FOR GCF INVOLVEMENT Section E EXPECTED PERFORMANCE AGAINST INVESTMENT CRITERIA Section F APPRAISAL SUMMARY Section G RISK ASSESSMENT AND MANAGEMENT Section H RESULTS MONITORING AND REPORTING

Section I ANNEXES

Note to accredited entities on the use of the funding proposal template

• Sections A, B, D, E and H of the funding proposal require detailed inputs from the accredited entity. For all other sections, including the Appraisal Summary in section F, accredited entities have discretion in how they wish to present the information. Accredited entities can either directly incorporate information into this proposal, or provide summary information in the proposal with cross-reference to other project documents such as project appraisal document.

• The total number of pages for the funding proposal (excluding annexes) is expected not to exceed 50.

Please submit the completed form to:

[email protected]

Please use the following name convention for the file name: “[FP]-[Agency Short Name]-[Date]-[Serial Number]”

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PROJECT / PROGRAMME SUMMARY

GREEN CLIMATE FUND FUNDING PROPOSAL | PAGE 1 OF 64

A A.1. Brief Project/Programme Information A.1.1. Project / programme title Green BRT Karachi

A.1.2. Project or programme Project

A.1.3. Country (ies) / region Pakistan

A.1.4. National designated authority (ies) Ministry of Climate Change

A.1.5. Accredited entity Asian Development Bank

A.1.5.a.Access modality ☐ Direct ☒ International

A.1.6. Executing entity / beneficiary Islamic Republic of Pakistan (IRP); Province of Sindh (POS); TransKarachi

A.1.7. Project size category (Total investment, million USD)

☐ Micro (≤10) ☐ Medium (50<x≤250)

☐ Small (10<x≤50) X Large (>250)

A.1.8. Mitigation / adaptation focus ☒ Mitigation ☐ Adaptation ☐ Cross-cutting

A.1.9. Date of submission 25.06.2018

A.1.10. Project contact details

Contact person, position David Margonsztern, Principal Urban Development Specialist (Transport)

Organization ADB

Email address [email protected]

Telephone number +63 2 632 5787

Mailing address 6, ADB Avenue – Mandaluyong City, 1550 Metro Manila, Philippines

A.1.11. Results areas(mark all that apply)

Reduced emissions from:

☐ Energy access and power generation (E.g. on-grid, micro-grid or off-grid solar, wind, geothermal, etc.)

☒ Low emission transport (E.g. high-speed rail, rapid bus system, etc.)

☐ Buildings, cities and industries and appliances (E.g. new and retrofitted energy-efficient buildings, energy-efficient equipment for companies and supply chain management, etc.)

☐ Forestry and land use (E.g. forest conservation and management, agroforestry, agricultural irrigation, water treatment and management, etc.)

Increased resilience of:

☐ Most vulnerable people and communities

(E.g. mitigation of operational risk associated with climate change – diversification of supply sources and supply chain management, relocation of manufacturing facilities and warehouses, etc.)

☐ Health and well-being, and food and water security (E.g. climate-resilient crops, efficient irrigation systems, etc.)

☐ Infrastructure and built environment (E.g. sea walls, resilient road networks, etc.)

Ecosystem and ecosystem services (E.g. ecosystem conservation and management, ecotourism, etc.)

☐

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PROJECT / PROGRAMME SUMMARY


A

A.2. Project / Programme Executive Summary (max 300 words) The project is a 30km fully segregated state-of-the-art BRT including cycle lanes, a bike sharing system, last-mile connectivity with e-pedicabs and improved pedestrian facilities directly benefitting 1.5 million residents of Karachi. It produces biogas from cattle waste and uses 0-GHG emission biomethane-hybrid buses. The project includes restructuring of the public transport network, and a fleet scrapping program and compensation mechanism. It shifts passengers towards public and Non-Motorized transport and implements a BRT system powered completely by biomethane. The project has a direct GHG reduction impact of 2.6 MtCO2e over 30 years. The BRT infrastructure is adapted to increase climate resilience. It has a high replication for other BRT projects in Karachi as well as other cities of Pakistan.

The BRT has a positive impact on air quality and noise and the biogas plant will reduce freshwater usage and the discharge of effluents to the Arabian Sea. It will benefit Karachi’s population of 14.9 million through increased access to safe, reliable, and affordable public transport. Benefits include time savings, reduced vehicle operating costs, improved safety and universal access for women, children, and the disabled at all stations and in buses, including segregated areas for women. The share of female passengers on the BRT shall be increased from currently 10% to 20%.

The total project cost is 583.5 MUSD of which 49 MUSD are requested from the GCF (37.2 MUSD as concessional loan and 11.8 MUSD as grant). ADB finances 442 MUSD and the POS 92.5 MUSD. The co-financing ratio is 11 and the marginal abatement cost 19 USD/tCO2e. The project has a positive EIRR and is financially sustainable concerning operational costs. GCF finance is required for climate-related additional investment and incremental total lifetime costs.

A.3. Project/Programme Milestone

Expected approval from accredited entity’s Board (if applicable) 28/09/2018

Expected financial close (if applicable) 31/12/2022

Estimated implementation start and end date Start: 01/01/2019 End: 31/12/2022

Project/programme lifespan 20 years 0 months

FINANCING / COST INFORMATION


B B.1. Description of Financial Elements of the Project / Programme The core of the project is the construction of a 30km fully segregated BRT line directly (28km main corridor and 2km common corridor) benefitting 1.5 million residents of Karachi, 25 new bus stations, secure access and crossings for pedestrian, improved sidewalks along the corridor, safe and convenient cycle lanes, bike-sharing facilities, e-pedicabs for last-mile connectivity, heritage preservation through the improvement of historical buildings and pedestrianization along a 2-km section of the common BRT corridor, provision of bus fleet and assistance in managing and operating services. The BRT will use 0-GHG emission biomethane hybrid buses. The project will produce its own biogas from cattle waste available within the larger urban zone of Karachi sufficient to cover 100% of the methane demand from BRT buses. The project also includes restructuring of the public transport network, the facilitation of a bus industry transition program, a fleet scrapping program and compensation mechanism for nonparticipating operators and organizational and institutional development. Table 1: Indicative Cost Estimate (in MUS$)

Project Components Total ADB POS GCF Main Component Sub-Component Loan Grant Component 1: Procurement and construction of BRT and complementing core infrastructure completed

Total 296.7 262.2 27.5 0 7.0 1.1. Utility relocation 27.5 0 27.5 0 0 1.2. Construction of main BRT corridor 223.5 216.5 0 0 7.0 1.3. Construction of common corridors 18.9 18.9 0 0 0 1.4. Implement off corridor improvements 6.7 6.7 0 0 0 1.5. Construction of depots and staging facilities 20.1 20.1 0 0 0

Component 2: Environment friendly Green BRT system in Karachi operationalized

Total 93.1 52.1 0 37.2 3.8 2.1. Procure BRT bus fleet 56.3 29.3 0 27.0 0 2.2. Install bike sharing and NMT last-mile connectivity vehicles (e-pedicabs)

3.8 0 0 0 3.8

2.3. Procurement and installation of a distance-based fare collection system, BRT control center, and other Intelligent Transport System components

22.8 22.8 0 0 0

2.4. Construction of biogas facility 10.2 0 0 10.2 0 Component 3: BRT project is compliant with Environmental and Social Management requirements, and implements an effective bus industry restructuring mitigation action plan

Total 22.2 18.4 3.8 0 0 3.1. Establishment and implementation of EMP and RSP

3.8 0 3.8 0 0

3.2. Implementation of bus industry restructuring program

18.4 18.4 0 0 0

Component 4: Effective management by TransKarachi and SMTA of BRT in-service

Total 59.2 58.2 0 0 1.0 4.1. Generate conceptual design for expansion of green BRT principles for BRT Karachi Blue and Yellow lines

22.6 22.6 0 0 0

4.2. Administration of TransKarachi and SMTA 11.0 11.0 0 0 0 4.3. Pay costs of finance during implementation 23.6 23.6 0 0 0



B 4.4. Implement the capacity development strategy for TransKarachi and SMTA

1.0 1.0 0 0 0

4.5. Implement project performance and GHG monitoring and evaluation system (including surveys, reporting and evaluation activities)

1.0 0 0 0 1.0

Contingencies Total 51.1 51.1 0 0 0 Physical 36.2 36.2 0 0 0 Price 14.9 14.9 0 0 0

Taxes 61.2 0 61.2 0 0 Total 583.5 442.0 92.5 37.2 11.8

See for details File 1: Karachi Finance File (does not include component 4.5. and is thus 1 MUSD lower) The Islamic Republic of Pakistan is requesting partial concessionality of GCF resources to carry out the proposed interventions. The concessionality is related to the incremental cost of using advanced technology buses which allow to reduce significantly emissions, the inclusion of Non-Motorized Transport (NMT) facilities including e-pedicabs for last-mile connectivity and bike-sharing, incremental costs to make infrastructure climate resilient, a proactive outreach program and a concessional loan for the biogas facility. The areas targeted for GCF involvement are not profitable (biogas-hybrid buses and NMT) respectively have not been implemented previously in the country (biogas facility from cattle residues) and therefore lack incentives for Pakistan’s private sector to invest. The local government budget is already stretched with the core investment in the new public transport system. The key barriers to be overcome towards adoption of low carbon buses are their incremental total cost of ownership and the higher risk associated with operators in managing these buses (the risk refers basically to expected energy savings). The major barrier towards NMT fostering relate to the non-profitability of measures. The major barrier related to the biogas plant is its innovative nature (technology and implementation risk), the organizational complexity and the complex legal and contractual arrangements. The GCF financial involvement allows to overcome these barriers through concessional financial means which allow to close the financial gap and to provide for sufficient technical and managerial assistance to allow for a successful implementation. The project leverages co-financing of 534.5 MUSD of which 92.5 MUSD from POS and 442 MUSD from ADB.

B.2. Project Financing Information Financial Instrument Amount Currency Tenor Pricing

(a) Total project financing

(a) = (b) + (c) 583.5 million USD ($)

(b) GCF financing to recipient

(i) Senior Loans

(vi) Grants *

37.2

11.8

million USD ($)

million USD ($)

(20) years

( 0.75) %

Total requested (i+ii+iii+iv+v+vi) 49.0 million USD

($)

Financial Instrument Amount Currency Name of

Institution Tenor Pricing Seniority



B

(c) Co-financing to recipient

Senior Loans

Grant

Options

Options

442

92.5

……………

……………

million USD ($)

million USD ($)

Options

Options

ADB

POS

………………

………………

( 25) years

( ) years

Based on ADB’s London interbank offered rate-based lending facility

( 3.89 ) % (indicative)

( ) % IRR

senior

Options

Options

Options

Lead financing institution: ADB

The government is in discussion with the AFD and AIIB to finance civil works and equipment costs jointly, for a total amount of $150 million equivalent. Both the AFD and AIIB have confirmed their interest in providing loan co-financing for the project. ADB, the AFD, and AIIB would jointly finance relevant contract packages and expenditure categories on a cost-sharing basis. ADB procurement guidelines would apply along with universal procurement for all jointly financed packages, in anticipation of such co-financing. ADB would administer (partially or fully) any AFD, AIIB, and GCF funds (ADB administration will comprise oversight with respect to procurement, safeguards, and disbursement) and would conclude co-financing agreements with the confirmed participating organizations. Such co-financing may be available within 6 months after approval of the proposed project by ADB’s Board of Directors.

GCF funds will have pari-passu arrangement with the other cofinanciers’ funds for “civil works” and “equipment” categories only, which include all components expected to be financed by the GCF.

(d) Financial terms between GCF and AE (if applicable)

In cases where the accredited entity (AE) deploys the GCF financing directly to the recipient, (i.e. the GCF financing passes directly from the GCF to the recipient through the AE) or if the AE is the recipient itself, in the proposed financial instrument and terms as described in part (b), this subsection can be skipped.

If there is a financial arrangement between the GCF and the AE, which entails a financial instrument and/or financial terms separate from the ones described in part (b), please fill out the table below to specify the proposed instrument and terms between the GCF and the AE.

Financial instrument Amount Currency Tenor Pricing

hoose a n item. …………………. Options ( ) years ( ) %

Please provide a justification for the difference in the financial instrument and/or terms between what is provided by the AE to the recipient and what is requested from the GCF to the AE.

B.3. Financial Markets Overview (if applicable) Not applicable

DETAILED PROJECT / PROGRAMME DESCRIPTION


C C.1. Strategic Context Karachi is the largest city of Pakistan and its main seaport, economic, and financial center. The population of this fast-expanding megacity is estimated at 14.9 million in the last 2017 census, and 23 million for the metropolitan area. One of the most densely populated cities in the world, Karachi is consistently ranked as one of the world’s most unlivable cities.1 Traffic congestion and induced air and noise pollution play a major role in these poor rankings. Car and motorcycle ownership remains low but is increasing fast due to a growing middle class. With other factors such as weak traffic management to organize competing modes and inefficient public transport, this rapid motorization exacerbates congestion and leads to increased pollution.2 For decades and until recently, large investments in various flyovers have reflected the prioritization of private road transport over public transport.3 Karachi is one of the largest cities in the world that lacks a formal public transport and mass-transit system. Pakistan is ranked number seven in the Long-Term Climate Risk Index (1997-2016 averages) with losses amounting to 0.6% of GDP equivalent to 3.8 billion US$4. Climate change will place greater pressure on urban infrastructure and specifically in Karachi on the risk of road flooding. Karachi’s current transportation system fails to provide mobility for all and is characterized by long commuter trip times, the rise of private and paratransit modes, and the decline of public transport. Services are currently only provided by informal paratransit vehicles and approximately 4,000 privately-owned buses. These weakly-regulated services have irregular frequencies and lack designated schedules, stops, and customer standards. Drivers compete and pull over to pick up passengers at will, and sometimes wait in place until the vehicles fill, which worsens congestion and impairs safety. Boarding the vehicles can be challenging, especially for the elderly, children, and the physically disabled. During peak commute times, it is common for passengers to sit on the roof or hang from the side of moving vehicles. Vehicles in this informal network tend to be old and poorly maintained, leading to high fuel consumption, increased emissions, and higher operating costs. The services tend to be expensive for the urban poor, as customers must pay again for each transfer between services and modes. Therefore, 40% of all trips are estimated to be still non-motorized, made on foot or bicycles. Karachi’s poorest and women would benefit from a well-designed, safe, and accessible public transport system. From 2008 to 2012, the Japanese International Cooperation Agency (JICA) developed the Karachi Transportation Improvement Project, comprising a Transport Master Plan for Karachi, which proposes a mass transit network composed of two metro-rail lines, the revival of Karachi Circular Railway and six BRT lines, of which the Red, Green, and Yellow lines are prioritized for immediate implementation.5 Building on this initiative, The Asian Development Bank (ADB) subsequently provided technical assistance to prepare Karachi’s BRT Project.6 The project is consistent with the Government of Pakistan’s Vision 2030, Framework for Economic Growth, and the National Climate Change Policy. It supports priorities set out in the Karachi Strategic Development Plan 2020,7 and is aligned with ADB’s Sustainable Transport Initiative and country partnership strategy.8 Pakistan’s Nationally Determined Contribution (NDC)9 has as target to reduce up to 20% of the projected 2030 emissions contingent upon availability of

1The Economist Intelligence Unit, 2017, Global Liveability Report, London. Karachi ranks 134 out of 140 cities. 2The project environmental impact assessment measured a 24-hour average concentration of particulate matter of less than 10 micro-meters (PM10) at 109–141 ug/m3 in six locations along the BRT corridor. The maximum level recommended by the World Health Organization is 50ug/m3 for a 24-hour measuring sample. 3In 2015, the provincial Government of Sindh, supported by the Federal Government of Pakistan, started reinvesting in public transport with the Green and Orange Lines BRT Projects, which are to date still under implementation. 4Ekstein et.al., 2017, Global Climate Risk Index 2018, Table 2 5JICA. 2012. The Study for Karachi Transportation Improvement. Karachi. 6ADB. 2012. New Approaches to Implement Sustainable Low Carbon Transport in Asia (Subproject B). Manila. 7Government of Pakistan, Planning Commission. 2007. Pakistan in the 21st Century, Vision 2030. Islamabad; Government of Pakistan, Planning Commission. 2011. Framework for Economic Growth. Islamabad; Government of Pakistan. 2012. National Climate Change Policy. Islamabad; Government of Sindh. 2007. Karachi Strategic Development Plan (KSDP) 2020. Karachi. 8ADB. 2010. Sustainable Transport Initiative Operational Plan. Manila; ADB. 2015. Country Partnership Strategy: Pakistan, 2015–2019. Manila. 9 http://www4.unfccc.int/ndcregistry/PublishedDocuments/Pakistan%20First/Pak-INDC.pdf



C international finance. The Technology Needs Assessment of Pakistan identified the implementation of BRT systems as one of the priority technology needs in the transport sector10. The project design incorporates lessons learned from past assistance, notably the need for strong political support and consensus, and a robust governance structure.11 Coordination with development partners such as the World Bank and JICA has been ensured, with a particular attention to expected co-financiers such as the AFD and the AIIB. Private sector participation is being considered for the BRT operations, but not for construction as globally few mass transit systems recover their capital costs through revenues alone, especially as fares must be affordable and socially acceptable. Revenue-generating parking plazas along the BRT corridor have been excluded from the project scope as it is assessed that these could be financed under a public-private partnership scheme and implemented in parallel with the proposed project. C.2. Project / Programme Objective against Baseline Mitigation Objective and Baseline Based on Pakistan’s Nationally Determined Contribution (NDC), in 2015 the country emitted 405 MtCO2e of which 186 MtCO2e or 46% are from the energy sector. Within latter, the transport sector accounts for around 25% of emissions. It is projected that total emissions will increase by 300% by 2030 with energy-related emissions growing at an average CAGR (Compound Annual Growth Rate) of 11% (representing in 2030 56% of total emissions). Pakistan intends to reduce up to 20% of the projected 2030 emissions contingent upon availability of international finance and has identified the implementation of BRT systems as a priority option to reduce transport emissions. The baseline is a continuation of current transport policies in Karachi favoring passenger cars with a weakly regulated and inefficient public transport system. Under a baseline GHG emissions per passenger trip will grow as public transport and NMT continue losing mode share. In 2008 the public transport mode share was 54% whilst in 2018 that mode share had dropped to 34%. During the same period the mode share of paratransit including taxis and rickshaws increased from 6-12% and motorcycles from 16 to 33% (passenger cars mode share of transport passengers decreased slightly from 25% to 16%)12. There are no regulatory plans for vehicle replacement. The government has recently updated the refineries to 500ppm sulfur and thus an update to Euro IV or V fuel is not envisaged shortly. The assessment of alternative options follows the procedure of the UNFCCC approved CDM methodologies for BRTs AM0031 and ACM0016. It does not model into the baseline the observed trend of reducing mode switch and increasing car ownership which would result in increased emissions. It also does not factor in that due to increased congestion driving speeds are reducing resulting in increased specific fuel consumption and GHG emissions. Also fuel consumption data used for cars (mode switch part) is based on COPERT values from the EU which refer to values under optimal maintenance conditions and not real-world fuel consumption. In essence the baseline scenario is considered as very conservative. The BRT Karachi contributes significantly towards a Low-Carbon Transport path. It shifts passengers from high-emitting transport means towards public transport and NMT and implements biomethane powered BRT.

Adaptation Objective and Baseline

As mentioned Pakistan is ranked number seven in the Long-Term Climate Risk Index. Climate change will place greater pressure on the existing constraints in urban development and planning common to cities in Sindh, Pakistan; these include: (i) steadily accelerating, hitherto unplanned and uncontrolled urbanization, some of which is attributable to the migration push factors of increased vulnerability to climate change, (ii) severe deficits in appropriate and adapted urban infrastructure provision and basic service delivery resulting from financial constraints, (iii) planning instruments

10GoP, 2016, Technology Needs Assessment Report 11From 2004 to 2008, ADB prepared the Karachi Mega City Sustainable Development Program, which included BRT corridors. The Program was finally dropped in 2009 at loan negotiation stage, because of disagreement between the provincial government and the municipality, and overall lack of political support and consensus. 12For 2008 based on JICA. 2012. The Study for Karachi Transportation Improvement. Karachi. 2008 vehicle and occupancy counts; and for 2018 based on Government of Sindh and ADB. 2018. Karachi BRT Project: Demand Modelling Report. Logit: Miami. 2018 vehicle and occupancy counts



C that either have not existed or are inadequately adapted to climate change and disaster risk management, lack an implementation-orientation and/or are unenforced, (iv) the growth in urban poverty and lack of inclusiveness in municipal planning, with the burden of vulnerability falling disproportionately on the urban poor, and (v) severe constraints in local government capacity, governance structures, and municipal finances all of which impact on the ability of cities to respond to climate change. The major climate risk directly related to the BRT are the increase of the future severity of storms with intense precipitation events and an increase in the number of “very hot days and heat waves”13.

The BRT detailed design caters for a projected increase in Karachi temperature and intense heat-waves and events of intense precipitation along the BRT route and makes the public transport system less vulnerable to climate risks. The baseline is that no adaptation measures would take place as they require additional design and infrastructure elements and result in potentially higher investment costs or usage of road construction techniques not common in Pakistan such as lane strips requiring higher quality materials and increased construction supervision increasing thereby construction costs. The climate-resilient design aspects include basically lane strips, vegetation in station verge, bioswale strip as delineator path and permeable pavements for pedestrian paths and cycle ways.

Socio-Economic Objective and Baseline

The project is aligned with the following impacts: (i) a safe, affordable, comfortable, and environment-friendly transport system in Karachi achieved; and (ii) quality of life in Karachi improved. The project will have the outcome improved quality of public transport in Karachi, benefiting 1.5 million of the city’s inhabitants. The proposed project will help develop a sustainable transportation system in Karachi by delivering the city’s “red line” BRT corridor, directly benefiting 1.5 million people. The project is economically justified by major time savings for future BRT passengers, vehicle operating cost savings, better air quality and carbon emissions savings, which will improve the health of Karachi’s citizens and mitigate climate change. The project will also make Karachi safer, boost private sector participation, and foster gender equity. This “third-generation” BRT system uses a “direct service” operational model allowing BRT vehicles to travel along the BRT corridor in the busiest parts of the city and off-corridor in less congested areas. This approach expands the system’s reach and capacity, lessens passenger transfers, and increases ridership and financial sustainability. The project was designed to limit operational subsidies, and create additional sources of revenue through commercial activities. The project also promotes engagement with the existing bus industry and establishes a negotiation process enabling existing operators to participate in the new BRT system. The project design includes a fleet scrapping program and compensation mechanism for nonparticipating operators. A large stakeholder engagement and participation plan is also being implemented to ensure buy-in from the impacted communities. The baseline is a continuation of the existing urban transport system characterized by low mobility and long commuter trip times. Strong growth in passenger car and motorcycle registration numbers result in a decreasing public transport mode share. Public transport service provision is of low quality. The BRT project will increase the attractiveness of public transportation by providing a reliable, fast, affordable and environmentally friendly service which retains current and attracts new public transport users from competing transport modes.

C.3. Project / Programme Description The project has 4 main components:

• Procurement and construction of BRT and complementing core infrastructure completed; • Environment friendly Green BRT system in Karachi operationalized;

13See for more details File 2: ADB, 2017, Climate Risk & Vulnerability Assessments Study of Karachi Bus Rapid Transit System



C • BRT project is compliant with Environmental and Social Management requirements, and implements an

effective bus industry restructuring mitigation action plan; • Effective management by TransKarachi and SMTA of BRT in-service.

The expected outcome of the project is an improved quality of public transport in Karachi, benefiting 1.5 million of the city’s inhabitants. This is reflected in BRT buses operating at a maximum 6-minute headway over a 125 km network with a daily BRT ridership of 320,000 passengers, of whom minimum 15% are women (in the informal public transport system only 10% are women). Annual GHG emissions are reduced on average by 87,000 tCO2e (Tank-to-Wheel). Component 1: Procurement and construction of BRT and complementing core infrastructure completed (297 MUSD) This component will finance the BRT core infrastructure including the road infrastructure and its drainage system, landscaping, depot, terminals, stations, intersections, corridor traffic management systems, pedestrian crosswalks, sidewalks and bike lanes along the corridor. The 28-km main corridor (red corridor) will be restructured over its entire width (“façade-to-façade”), including (i) the BRT infrastructure comprising 25 stations and dedicated lanes built at-grade in the median; (ii) the mixed-traffic roadway comprising up to six lanes in each direction in wider sections; (iii) the non-motorized transport infrastructure comprising bicycle lanes and improved sidewalks along the corridor; (iv) on-street parking and green areas added in various locations and (v) sub-staging facilities at KGA grounds. A 2-km section of the common corridor, including 3 stations, will also be restructured to create a mall for pedestrians and BRT only, with an uplifting of historical buildings’ facades. The BRT infrastructure will be completed with two depots, one underground staging facility, and off-corridor bus stops. The project is a third-generation BRT using a “direct service” operational model allowing BRT vehicles to travel along the BRT corridor in the busiest parts of the city and off-corridor in less congested areas. This approach expands the system’s reach and capacity, lessens passenger transfers, and increases ridership and financial sustainability. The BRT applies a distance-based fare between PKR 15 and PKR 55 which is commensurate with the prevailing fare on the corridor. The project was designed to limit operational subsidies and create additional sources of revenue through commercial activities. Various engineering design works financed under ADB’s PDA loan have confirmed the project’s technical viability14. The 28-km BRT main corridor alignment was selected to capture major demand hubs while verifying the possibility of retrofitting the BRT infrastructure in congested areas and narrower corridor sections. The BRT remains at grade for 95% of its length, allowing 100-km off-corridor service routes to enter the dedicated infrastructure. 3 underpasses and one elevated station are planned to allow for maximum commercial speed at critical junctions. The mixed-traffic roadway comprises up to six lanes in each direction, as well as various grade-separated structures to allow for all mixed-traffic movements while accommodating the BRT at grade. Sub-components of this component comprise:

a) utility relocation, b) construction of main BRT corridor, c) construction of common corridors, d) implement off corridor improvements; and e) construction of depots and staging facilities

The expected output of this component is the construction of Karachi’s first sustainable BRT corridor and associated facilities. This BRT system will consist of (i) 28 km of BRT infrastructure on main corridor, including 25 stations and dedicated lanes, completed as designed and scored at a “gold” quality standard (ii) 2 km of common corridor BRT infrastructure, including 3 stations, dedicated lanes, pedestrianization and façade uplifting on the common corridor, completed as designed; (iii) rebuilt mixed traffic lane(s), sidewalks, green areas, on-street parking, and street lights over the whole length of the corridor; (iv) bicycle lanes over entire corridor; (v) two depots and one staging facility with

14The Engineering, Procurement, and Construction Management (EPCM) team has carried out various surveys on the corridor’s topography, hydrology, geology and utilities.



C commercial areas; (vi) bus stops over 100 km of off-corridor bus routes; and (viii) installation of 78 safe (bridge, tunnel or signalized if at-grade) pedestrian crossings along the BRT corridor Adaptation of BRT Infrastructure: A climate risk vulnerability assessment led to a reassessment of the drainage capacity requirement to climate-proof the BRT corridor from floods.15 Measures include basically an increased water retention capacity and slow infiltration, the utilization of lane strips with a median filtration system, the utilization of bio-swales along corridors, the adding of drainage capacity, vegetation in station verge, bioswale strip as delineator path and permeable pavements for pedestrian paths and cycle ways. This results in additional costs e.g. in the case of lane strips higher resistance concrete must be utilized with a very high quality of material and work due to increased pressure on edges of the lane strip. This additional cost is estimated at minimum 10 MUSD adaptation cost16. GCF grant funding is envisaged to cover partial costs of the adaptation of the infrastructure in this component. The BRT component results in GHG reductions due to lower emissions per passenger compared to the current transport system (due primarily to larger buses, a better load factor and a higher operating speed) and mode shift to the BRT due to its higher convenience. The component has also additional non-quantified GHG emission reductions due to increased usage of NMT, a reduced congestion on roads and a higher driving speed also for other transport modes. Component 2: Environment friendly Green BRT system in Karachi operationalized (93 MUSD) This component comprises 4 subcomponents:

a. Procure BRT bus fleet; b. Install bike sharing and NMT last-mile connectivity vehicles (e-pedicabs); c. Procurement and installation of a distance-based fare collection system, BRT control center, and other

Intelligent Transport system components; d. Construction of biogas facility

The expected output of this component is together with the components 3 and 4 the establishment of sustainable BRT operations. The major outcome of this component will be (i) procurement of modern low-emission BRT fleet (mix of 9m, 12m or 18m in length); (ii) Procurement and installation of a distance-based fare collection system, BRT control center, and other ITSs by TransKarachi to operate BRT services; (iii) Establishment of a bike sharing facility; (iv) Procurement of e-pedicab vehicles; and (v) Construction of biogas facility. BRT buses result in reduced GHG emissions compared to conventional buses due to usage of biomethane. They are more efficient than currently operating CNG buses due to being larger units with advanced technology. NMT and e-pedicab services result in a long-term modal shift towards NMT and reduced fossil rickshaw emissions. GCF grant and loan funding is envisaged for the incremental financial cost of biomethane hybrid buses compared to baseline diesel units and for the bike sharing and e-pedicabs. A GCF loan is envisaged for the biogas facility.

a). Procure BRT bus fleet The project includes the purchase of 199 new buses (19 9m, 134 12m and 46 18m buses). Baseline buses for the BRT are diesel Euro III units. Currently circulating buses comply with the emission standard Euro II or previous. Recently the government started the import of 500ppm sulfur diesel which is commensurate with Euro II engines but is also used in some countries with Euro III buses. Euro IV or higher emission standard buses with more advanced emission control technologies cannot be used due to the sulfur levels in diesel. The Provincial government is not in favor of using CNG buses due to limited CNG availability especially during winter months. A cost-benefit and environmental analysis of different vehicle and fuel technologies was made for the BRT including diesel, diesel-hybrid, CNG, CNG-hybrid, Biomethane hybrid and battery-electric buses (BEBs)17. The recommended option from an economic cost-benefit are biomethane-hybrid units which however have a higher financial total cost of ownership (TCO) than baseline diesel

15See details File 2 16See File 12 and 13 17See for details File 3: Grutter Consulting, 2019, GHG and Air Quality Impact of the BRT Karachi and Assessment of Technology Options for BRT Buses



C units18. Biomethane buses are technically identical to CNG units and are used in various cities worldwide (e.g. Basel, Switzerland). CNG-hybrid units are basically in usage in multiple Chinese cities which operate them since nearly a decade. Biomethane-hybrids are not known to operate in any country worldwide but, technically, a biomethane bus is idem to a CNG unit. Combining biomethane and hybrids is an innovative option which allows for stretching scarce biogas available and is an option for 0-emission buses. In Pakistan CNG buses are used widely not however biomethane and not hybrid units i.e. both sub-components are new.

b). Install bike sharing and NMT last-mile connectivity vehicles (e-pedicabs)

Bike sharing systems will include conventional bicycles, e-bicycles as well as cargo bicycles (in total around 500 units). A modern e-pedicab vehicle (initial usage in a pilot project of ADB in Nepal) will be used for the last-mile connectivity19. Re-designed e-pedicabs have compared to conventional rickshaws a lower weight, a set of headlights and turning indicators, a more comfortable seating area for the passenger, better sun and rain protection and an integrated an on-board tablet in the privacy panel. Some vehicles also have an electric assist function which takes some of the load off the operator using a small motor. There is also a USB cell phone charge allowing passengers to get a quick charge on their ride. Around 300 e-pedicab units shall be purchased. This replaces short trips made currently also with NMT and motorized rickshaws (CNG units). The BRT infrastructure also includes cycling lanes which are a pre-condition for a sustainably high share of cyclists due to allowing for safe, convenient and fast cycling.

c). Procurement and installation of a distance-based fare collection system, BRT control center, and other Intelligent Transport System components

This includes Intelligent Transport System (ITS) components, fare collection systems and the establishment of a BRT control center. It enables a centralized control of bus operations and fare management. The ITS and fare collection system will allow for a distance-based fare collection and efficient operations (see also component 4).

d). Construction of biogas facility Behns Colony, sometimes called cattle colony (Behns means water buffalo in Urdu) contains approximately 400,000 animals producing milk for local consumption. The waste from the cows is discharged directly to drains adjacent to the cattle yards and becomes the property of the Sindh Solid Waste Management Board after leaving the cattle yard. Currently, some of this waste is collected to be sold as fertilizer whilst the balance is allowed to flow to the sea. The waste from around 15% of animals is sufficient to fuel the BRT Red Line bus fleet on an ongoing basis. The biogas plant includes a 250,000m3 Covered In Ground Anaerobic Digester (CIGAR) system made from high density polyethylene pipes. Cattle dung collection is carried out using existing canals. The facility will produce approximately 64,000 m3of methane gas per day, with a portion of that used in a biogas cogeneration system to provide electrical power to the plant and neighboring cattle yards and the balance being converted to biomethane to meet the BRT needs. None of the biomethane produced will be used outside the project boundary i.e. it will not affect the local power market. Solid from the process can be sold as fertilizer after heat treating using heat from the biogas engine providing power to the facility. The plant can produce approximately 30,000 t per year of fertilizer that is high in Nitrogen, Phosphorous and Potassium. Effluent from the CIGAR would be primarily treated and provided to the cattle yards as wash water. It has been assumed that the upgraded gas (from 60% to 89% methane content) will be injected into the Sui gas grid to an offtake point near the BRT Red Line depot. The alternative would be transport by truck which would result in marginal emissions of less than 50 tCO2e per annum due to transport, which is still much less than transport emissions from diesel fuel from the refinery to petrol stations.

Component 3: BRT project is compliant with Environmental and Social Management requirements, and implements an effective bus industry restructuring mitigation action plan (22 MUSD) This comprises two subcomponents

18The economic analysis monetizes the value of reduced pollution levels of PM2.5, NOx, SO2 and CO2. 19See File 11 for more information on e-pedicabs



C a) Establishment and implementation of Environmental Management Plan (EMP) and Resettlement Plan (RSP)20

and b) Implementation of bus industry restructuring program.

As part of the this component project will be able to (i) set up and implement the environmental management plan (EMP); (ii) set up and implement the resettlement plan (RSP); and (iii) set up of bus industry restructuring program including a compensation mechanism and a fleet scrapping program for excluded operators. The project will not involve acquisition of any private land. However, it will displace 795 owners and workers from micro businesses occupying the existing right-of-way and minor parts of privately owned permanent, commercial structures which impinge the existing right-of-way. Affected structures include 263 semi-permanent structures, and 86 permanent secondary structures from commercial establishments. Around 493 micro business will need to relocate to temporary alternative locations during construction and to permanent formal vending spaces that will be included in the project design. A draft resettlement plan has been prepared in consultation with the affected persons and relevant agencies. ADB emphasized engagement with the existing bus industry and established a negotiation process enabling existing operators to participate in the new BRT system. Dedicated cost and consultancy support is built into the project design to facilitate bus industry transition through negotiations and capacity building to operate the BRT system. The industry transition process will also include the green and orange lines, implemented prior to the red line, which will ensure a common approach and minimize potential conflicts that could affect the project’s implementation. Consultations with existing bus operators’ federations were held by consultants to inform operators about the project, and skilled negotiators have been recruited to further discuss and develop a business model to include the existing operators as much as possible in the BRT operations. The initial BRT fleet will be financed under the project and leased to private operators to reduce the need to mobilize capital and allow existing operators to participate in the bidding process. The project design also includes a fleet scrapping program and compensation mechanism for non-participating existing operators. This ensures that vehicles are actually off the road and not competing with BRT services. It therefore also ensures GHG emission reductions. A large stakeholder engagement and participation plan is also being implemented to ensure buy-in from the impacted communities. This component has no direct GHG impact but is important to ensure that the hardware components 1 and 2 can be effectively implemented. No GCF finance is envisaged for this component. Component 4: Effective management by TransKarachi and SMTA of BRT in-service (59 MUSD) This component comprises construction supervision, capacity building, conceptual design of blue and yellow BRT lines, TransKarachi operating costs for 3 years, and GHG monitoring and reporting as well as documentation of core project aspects. Sub-components of this component are

a) Generate conceptual design for expansion of green BRT principles for BRT Karachi Blue and Yellow lines; b) Administration of TransKarachi and SMTA; c) Pay costs of finance during implementation; d) Implement the capacity development strategy for TransKarachi and SMTA; and e) Implement project performance and GHG monitoring and evaluation system (including surveys, reporting and

evaluation activities) The expected output of this component is together with the components 2 and 3 the establishment of sustainable BRT operations will be (i) TransKarachi and the SMTA are fully staffed (with 15% female staff); (ii) capacity building and training of TransKarachi and SMTA staff as per their respective organizational development plans are completed; (iii) project monitoring and evaluation is set up and project performance management system with a gender indicator also set up; (iv) primary and baseline data surveys are conducted as per schedule; (v) socioeconomic and perception surveys are conducted as per schedule; (vi). annual GHG monitoring reports, performance reports on NMT, e-pedicabs,

20EMP and RSP are together sub-components 1 and the bus industry re-structuring program sub-component 2



C biomethane hybrid buses and biogas facility including publication reports for these 4 areas are realized; and (vii). BRTg to start on 2nd semester 2020 with full operations 2021. This component has no direct GHG impact but is important to ensure that the hardware components 1 and 2 can be effectively implemented. GCF grant finance is envisaged for the monitoring component of the project. The BRT system was planned using a detailed methodology, including the inventory and analysis of existing services to determine current service capacity and existing demand, and a purpose-built demand model. Based on these results, an optimized routing and network plan was developed to ensure maximum ridership and the financial sustainability of the system, including the lowest possible operational subsidies. The institutional structure has been improved by the establishment of the Sindh Mass Transit Authority (SMTA) and TransKarachi, which will manage and control the overall quality of the BRT system’s operations. The system’s quality will be enhanced by maximizing the use of private sector contracts for system operations. TransKarachi will specifically oversee private sector contracts to companies for (i) bus operations; (ii) system control, encompassing fare system, station services, and bicycle sharing system; (iii) the financial clearinghouse; and (iv) commercial services such as property management and advertising. An estimated 1.5 million passengers are predicted to use the BRT regularly, with the percent of female passengers reaching 15% in the first year of operation and increased to 20% in the last year of project implementation (2022). The low percent of female passengers in public transport is mainly due to the risk of harassment that women face in overcrowded public buses. Consequently, most women prefer to walk 2-km per day on average, or are forced to use more expensive private transportation, impacting their disposable income. The project will establish universal access and safety features for women, children, and the disabled in all 28 BRT stations and their accesses, including proper lighting and monitoring through closed-circuit television cameras; and in buses, including segregated areas for women, and staff trained to deal with harassment incidents. Categorized as effective gender mainstreaming, the project will encourage women’s meaningful participation by ensuring that 10% of BRT operations employees and TransKarachi staff are women. Overall, the project is expected to generate 2,130 jobs directly through future BRT operations, including 1,424 jobs for station services (such as ticketing, security, and cleaning), 615 jobs in bus operations (such as driving, conducting, and mechanics), and 81 TransKarachi staff21. The project has some novel features including for GHG mitigation biogas production, 0-emission energy saving buses, last-mile 0-emission connectivity and advanced inclusion of NMT facilities including partial pedestrianization and cycle-ways. It also has novel adaptation components including lane-strips and high capacity drainage systems. The project will closely monitor the performance of these components (environmental and financial performance including operational issues and risks), and document them. Taxes and Contingency Costs (total 116 MUSD) are not specific project components and therefore not further detailed in this section. All activities listed are carried out by TransKarachi.

C.4. Background Information on Project / Programme Sponsor (Executing Entity) Executing entities are the Islamic Republic of Pakistan: in view of their role, at least as a matter of the legal agreements, channeling GCF Proceeds for the loan through to the project; the Province of Sindh: in view of their role, at least as a matter of the legal agreements, channeling GCF Proceeds for the loan through to the project; TransKarachi: in view of their role undertaking the activities for the project. The borrower is the Islamic Republic of Pakistan, which will enter into a subsidiary loan agreement with the Provincial Government of Sindh. The Islamic Republic of Pakistan is represented by the Economic Affairs Division under the Ministry of Finance. The Islamic Republic of Pakistan has the loan agreements with ADB and an on-lending agreement with the Province of Sindh. The Provincial Government of Sindh has within its transport and mass transport department the vision to provide safe, reliable, comfortable and affordable means of transportation. Sindh is one of four provinces of Pakistan with 58 million inhabitants and includes Karachi as main city.

21For further details see Files 4 (Summary Poverty Reduction and Social Analysis and Strategy) and File 5 (Gender Action Plan)



C The Province of Sindh has budgeted expenditures for 2017-18 of 10.8 billion USD. The Province of Sindh provides for counterpart financing of the project.

TransKarachi realizes all activities and manages operations of the BRT including related activities such as the biogas plant and the bike-sharing facilities. TransKarachi is a special purpose vehicle licensed in June 2018. TransKarachi is incorporated and licensed under the Securities and Exchange Commission of Pakistan as a Section 42 (nonprofit) public company. The only company owner is the Province of Sindh. The majority of the members in the company’s Board of Directors (BoD) are ex-officio members (i.e members of the POS administration), with 6 representatives, there are also 5 Independent Directors, including the Chairman of the Company, representing the civil society. As such, the company is relatively independent in the way it wants to run its business and manage BRT operations. No legal arrangements will be made between IRP/POS and TransKarachi, other than the ones governing section 42 companies, the Act governing the relationship between TransKarachi and SMTA, and the project agreement to be entered into between ADB, TransKarachi and SMTA.

TransKarachi will implement and own the BRT infrastructure and assets, and is responsible for BRT operations and management of service contracts including the biogas plant and the bike-sharing facilities. It is expected that TransKarachi will have a staff of 26 persons. It will maintain separate books and records by funding source for all expenditures incurred on the project following International public Sector Accounting Standard for cash-based accounting. TransKarachi financial statements will be audited in accordance with International Standards of Supreme Audit Institutions, by an independent auditor acceptable to ADB, such as the Auditor General of Pakistan. The oversight body is the SMTA board of directors, comprising of the Minister, Transport Department, Province of Sindh (chair); the Mayors / Administrators of Karachi, Sukkur and Hyderabad (co-chairs); the secretary of the Transport Department; the secretary of the Finance Department; the secretary of the Planning and Development Department; the director General of the Public-Private Partnership Unit; the deputy inspector general of the Traffic Police; a representative of the Pakistan Engineering Council; the director of the Military Lands and Cantonments; a representative of the Pakistan Council of Architects and Town Planners; and the managing director of the SMTA (members). For the construction and operation of the biogas plant, TransKarachi will procure an independent contractor (a procured party).

C.5. Market Overview (if applicable) Integration of Traditional Bus Operators and Competing Bus Routes Approximately 4,000 standard and mini buses, shared between a multitude of semi-public and private operators, ply the city. Small private operators provide public transport services based on the route permission given by the District Regional Transport Authority with the bus fare regulated by the Province of Sindh. The BRT will be operated by private bus operators paid through a vehicle-km fare. To avoid competition of the BRT on parallel roads, minibuses will be removed or relocated. This entails compensation of existing public transport providers and a scheme of how to integrate them in the new system. ADB emphasized engagement with the existing bus industry and established a negotiation process enabling existing operators to participate in the new BRT system. Dedicated cost and consultancy support is built into the project design to facilitate bus industry transition through negotiations and capacity building to operate the BRT system. The initial BRT fleet will be financed under the project and leased to private operators to reduce the need to mobilize capital and allow existing operators to participate in the bidding process (lease-to-won scheme comparable to the ADB project in Peshawar). The project design also includes a fleet scrapping program and compensation mechanism for non-participating existing operators. This ensures that vehicles are actually off the road and not competing with BRT services. The scrapping / compensation programme will be modelled upon the similar package as practiced in the ADB-financed Peshawar project. Vehicles that are deemed excessive in age, road worthiness, or environmental performance will be formally scrapped. The scrapping process will follow a formal certification process. Any relocation of buses would improve additionally GHG reductions due to the fact that relocated buses replace in rural areas even older units with lower efficiency. The case of additional units being added to the market beyond what the market can carry is not feasible as this would reduce the profitability of the transport market even more (this is also acknowledged by the UNFCCC with the approved CDM methodologies for BRT ACM0016 and AM0031 both of which do not require scrapping as condition nor for determination of emission reductions).



C Hybrid Gas-Buses for the BRT Hybrid CNG or LNG buses of many bus sizes are used in large fleets in many Chinese cities. Examples of cities with large fleets of operational gas-hybrids since more than 5 years include Baoding, Fuzhou, Guangzhou (nearly 2,000 units), Hengyang, Jinan, Linyi, Xiangtan, Yanan, Yangzhou, Zhengzhou (more than 2,000 units) and Zunyi. Outside PR China basically diesel hybrids are used (in large fleets in London, New York or Bogota). CNG hybrid buses on average cost 20% more than conventional CNG buses and are available from multiple manufacturers worldwide i.e. a competitive market with a proven product application exists. Proposed Pricing and Subsidies The BRT operational plan was designed to ensure that revenue generated from the system will adequately cover system operations and maintenance costs, eliminating the need for operational subsidies. The BRT system generates revenue from (i) fares, with distance-based fares set at PRs15 to PRs55, and averaging PRs29.36; (ii) advertising; and (iii) rent on concessions storefronts in stations and depots. In the absence of a cost recovery tariff, a conventional financial evaluation based on cash flow analysis leading to the computation of a financial internal rate of return is not considered appropriate.22 Instead, a financial model was developed to confirm that revenues will cover operating costs in various scenarios. The results show that using biomethane significantly improves the system’s financial performance, which led to include the production facility under the project scope and the ADB loan. In most scenarios, the future financial position of TransKarachi confirms solid net cash flows as well as its financial capacity to cover recurrent costs to sustain the facilities developed under the project.

C.6. Regulation, Taxation and Insurance (if applicable) Key legislation related to environmental protection in Pakistan has been devolved to the state level, including “The National (and Sindh) Environmental Protection Act” (1997, 2014) and Sindh Environment Protection Regulation (2014). Together these laws authorize the Director General of the Sindh Environment Protection Agency (SEPA) to undertake activities to conserve and enhance the quality of the environment. The SEPA will review the present Environmental Impact Assessment (EIA) and take public comment, then through a process of final review among a committee of experts provide its consent with conditions for the Project. The EIA is prepared under the authority of the Government of Sindh Environmental Protection Act and Regulation and ADB’s Safeguard Policy Statement (2009). It is mandatory to inform the public through a notice where the environmental reports may be accessed along with date, time and location of public hearing for comments on the project. The project is complying with public disclosure and consultation requirements. Public consultations with various stakeholders were conducted from December 2017 to May 2018. In addition, public hearings will be organized in August 2018. The draft EIA was disclosed on ADB’s website on 30 May 2018, and the final EIA will be disclosed by the end of August 2018.SEPA will review the present EIA and take public comment, then through a process of final review among a committee of experts provide its consent with conditions for the Project. The final draft EIA must be provided prior to ADB Board circulation. Thus, the final EIA is available by end of September, at which it will be posted on the ADB website. At this late stage, there is a very low to no risk that the final report will produce any changes that have cost impacts. Sindh Environmental Quality Standards specify amongst others the maximum allowable concentration of pollutants in gaseous emissions from vehicle exhaust and noise emissions. These apply during the construction as well as operation phase and need to be accounted for regarding construction equipment/vehicles and buss purchased by the project. The Government of Sindh resettlement and compensation policy guiding the allocation of entitlements provides for full compensation cost as compensation i.e. the Project will replace in kind or cash what is lost in terms of land, structures, livelihood, community facilities and services. Sindh Occupational Safety and Health Bill deals with provisions for general health and safety of workers and applies to BRT operations and the construction phase. These laws will be included in the bidding documents for contractors. For further details concerning regulations during construction and operation of the project see File 9 (EIA).

22The Province of Sindh will repay the loan from its own resources and will consider the capital investment (including the BRT infrastructure and initial fleet) as an upfront subsidy. Accordingly, TransKarachi will not need to repay the loan from the BRT system’s operational revenue. The various terms and conditions of the ADB, AIIB, and AFD loans will therefore not impact this financial analysis.



C All applicable taxes have been included in the budget (61 MUSD). In detail they are:

• Goods and Services tax of 30% on buses, 7.5% on civil works and 17% on equipment • Special Stamp Duty tax of 13.5% on consultant’s fees

Buses are operated by private companies who need to comply with legal regulations concerning insurance coverage for passenger transport. Once the project has been approved by the Central Development Working Party (CDWP) of the Planning Commission, and by Pakistan’s Executive Committee of the National Economic Council (ECNEC), no other approvals are required. The standard procedure is: (i) ADB proceeds with loan negotiations once CDWP has approved; (ii) ADB signs the loan agreement with IRP once ECNEC has approved; and (iii) ADB declares effectiveness once legal opinions from all signatories of the legal and project agreements have been received by ADB.

C.7. Institutional / Implementation Arrangements

ADB has established a single donor trust fund to receive, hold in trust and administer the GCF Proceeds, and Other GCF Funds as trustee. The GCF Account (as defined in the Accreditation Master Agreement between ADB and the GCF (the AMA)) constitutes the single donor trust fund.

In accordance with the AMA, the GCF and the Accredited Entity will enter into a funded activity agreement whereby the Accredited Entity shall administer the GCF proceeds to be disbursed by the GCF for the implementation of the Project.

Under a $9.7 million project design advance loan approved by ADB in September 2016, the ADB supported the legislation for the establishment of the Sindh Mass-Transit Authority (“SMTA”), which was approved in September 2016; and a special purpose vehicle called TransKarachi, which was licensed in August 2018 by the Securities and Exchange Commission of Pakistan and is expected to be incorporated as a Section 42 (nonprofit) public company by the end of September 2018. The SMTA is the authority responsible for developing policies and regulations, and planning, coordinating, and funding urban transport for all cities in Sindh, and will not implement any Project activities but will fulfil an oversight function. Pursuant to its authority delegated by SMTA and mandate for which it was incorporated, TransKarachi will implement and own the BRT infrastructure and assets, and is responsible for BRT operations and management of service contracts.

The Executing Entities are: (i) the IRP in view of their role, at least as a matter of the legal agreements, channelling GCF proceeds for the Funded Activity; (ii) the POS in view of their role, at least as a matter of the legal agreements, channelling GCF proceeds for the Funded Activity; and (iii) TransKarachi in view of their role undertaking and implementing the Funded Activity.

Pursuant to the FAA, the Accredited Entity will execute: a sovereign loan agreement with the IRP in respect of the GCF loan (the “GCF Loan Agreement"); and a grant agreement with the IRP in respect of the GCF grant, as defined below (the “GCF Grant Agreement”). The Accredited Entity will also execute a project agreement with the POS, SMTA and TransKarachi (the “Project Agreement”). Each such agreement will be a subsidiary agreement for the purposes of the AMA and the funded activity agreement (together, the “Subsidiary Agreements”). ADB will also enter into a loan agreement (the “Accredited Entity Loan Agreement”) with the IRP for the purposes of providing its co-financing in an amount of USD 442,000,000 to the Project (the “Accredited Entity Loan”).

The POS will provide its co-financing by way of budgetary contribution in an amount of USD 92,500,000 to the Project pursuant to the Project Agreement (the “POS Co-financing”23 and, together with the Accredited Entity Loan, the “Co-financing”) (the Project Agreement and the Accredited Entity Loan Agreement together the “Co-financing Agreements”) (and the Accredited Entity and POS together the “Co-financiers”). Pursuant to the Subsidiary Agreements and Accredited Entity Loan Agreement, the IRP shall be obliged to make available the GCF Proceeds and the Accredited Entity’s Co-financing to the POS, and the POS shall be obliged to make available the GCF Proceeds and the Co-financing to TransKarachi for the implementation of the Project. Notwithstanding the foregoing, the GCF Loan Agreement, GCF Grant Agreement and Accredited Entity Loan Agreement will contain a delegation of authority by IRP to TransKarachi, which

23The POS Co-financing will cover cash contributions for payment of taxes, resettlement costs, and utility relocation costs. To the extent that tax exemptions are obtained for the Project during the course of its implementation, POS Co-financing that was intended to be used to pay such taxes will not be provided.



C will be authorised to submit disbursement applications to the Accredited Entity requesting disbursements under the GCF Loan Agreement, the GCF Grant Agreement and the Accredited Entity Loan Agreement, for the direct payment by ADB to the Project contractors and suppliers.

The POS and the Accredited Entity have developed and will discuss and agree on the Project Administration Manual (“PAM”) as part of the Accredited Entity loan negotiations. The PAM describes details of the Project implementation arrangements, including the envisioned procedures for development of the components to be implemented, and Project monitoring and reporting arrangements.

For the implementation of sub-component 2.4 (biogas plant), TransKarachi will conduct a public tender for the selection and procurement of a contractor that will undertake, under a BOOT model, the construction and operation of the biogas plant. TransKarachi, as the Executing Entity for this sub-companent, will be responsible for the supervision of the performance of such contractor and for the payment for such services.

Table 2: Project Components and Executing Entity

Component Sub-component Executing Entity 1. Procurement and construction of BRT and complementing core infrastructure completed

1.1 Utility relocation 1.2 Construction of main BRT corridor 1.3 Construction of common corridors 1.4 Implement off corridor improvements 1.5 Construction of depots and staging facility

TransKarachi

2. Environment friendly green BRT system in Karachi operationalized

2.1 Procure BRT bus fleet 2.2 Install bike sharing and NMT last-mile connectivity vehicles (e-pedicabs) 2.3 Procurement and installation of a distance-based fare collection system, BRT control center, and other Intelligent Transport System components 2.4 Construction of biogas facility

TransKarachi

3. BRT project is compliant with Environmental and Social Management requirements, and implements an effective bus industry restructuring mitigation action plan

3.1 Establishment and implementation of EMP and RSP 3.2 Implementation of bus industry restructuring program

TransKarachi

4. Effective management by TransKarachi and SMTA of BRT in-service

4.1 Generate conceptual design for expansion of green BRT principles for BRT Karachi Blue and Yellow lines 4.2 Administration of TransKarachi and SMTA 4.3 Pay costs of finance during Implementation 4.4 Implement the capacity development strategy for TransKarachi and SMTA 4.5 Implement project performance and GHG monitoring and evaluation system (including surveys, reporting and evaluation activities)

TransKarachi

Disbursement 1. Except for a few exceptions (TransKarachi 3-years OPEX, and funds for the Bus Industry Transition Plan which are 100% ADB-financed), no ADB or GCF funds will be disbursed through IRP, POS or TransKarachi. ADB will apply the direct payment procedure, such as follows (i) contractors/suppliers submit a claim to TransKarachi; (ii) TransKarachi checks and endorses such claim, and submits accordingly a withdrawal application (WA) to ADB for payments to contractors/suppliers; (iii) ADB checks such WA, and if found in order, proceed with the direct payment to contractors/suppliers.



C 2. For “civil works” and “Equipment” categories only (see PAM, Section IV.E – Allocation and Withdrawal of Loan/Grant Proceeds) ADB will use the pari-passu arrangement with all confirmed co-financiers (including GCF), i.e. each co-financier will pay a % of each claim calculated based on their respective weight in the financing of such categories. TransKarachi will submit one WA by co-financiers to request for payment of such %. As part of its administration of co-financier funds, ADB will check all WAs and will (i) instruct AFD and AIIB to make their payments directly to contractors/suppliers; and (ii) make the payment on behalf of GCF directly to contractors/suppliers.

Fund Flow Arrangements for GCF Proceeds

ADB

Government of Pakistan

SMTA*

Government of Sindh

Suppliers of Goods

Contract Invo

ice

Direct payment by ADB

Contractors

Consultants

Document flow

Funds flow

TransKarachi

Withdrawal Applications for Direct Payment to ADB

Contract In

voic

e

RATIONALE FOR GCF INVOLVEMENT


D C.8. Timetable of Project/Programme Implementation

Components/Sub-components 2018 2019 2020 2021 2022 2023 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Component 1: Procurement and construction of BRT and complementing core infrastructure completed

1.1. Utility relocation 1.2. Construction of main BRT corridor 1.3. Construction of common corridors

1.4. Implement off corridor improvements 1.5. Construction of depots and staging facility Component 2: Environment friendly Green BRT system in Karachi operationalized

2.1. Procure BRT bus fleet 2.2. Install bike sharing and NMT last-mile connectivity vehicles (e-pedicabs)

2.3. Procurement and installation of a distance-based fare collection system, BRT control center, and other Intelligent Transport System components

2.4. Construction of biogas facility Component 3: BRT project is compliant with Environmental and Social Management requirements, and implements an effective bus industry restructuring mitigation action plan

3.1. Establishment and implementation of EMP and RSP 3.2. Implementation of bus industry restructuring program Component 4: Effective management by TransKarachi and SMTA of BRT in-service

4.1. Generate conceptual design for expansion of green BRT principles for BRT Karachi Blue and Yellow lines

4.2. Administration of TransKarachi and SMTA 4.3. Pay costs of finance during implementation 4.4. Implement the capacity development strategy for TransKarachi and SMTA

4.5. Implement project performance and GHG monitoring and evaluation system (including surveys, reporting and evaluation activities)

R24 E25 R R R E26

24 R = APR 25 E = Midterm Evaluation 26 E = Final Evaluation

RATIONALE FOR GCF INVOLVEMENT


D

D.1.Value Added for GCF Involvement

GCF’s financing will be instrumental in delivering the 1st full 0-emission BRT worldwide. The incremental cost, investment capital required, risk and complexity of producing biogas and running hybrid buses is compensated through the GCF involvement. The GCF can close a financing gap for these components. In absence of the GCF involvement a standard Business as Usual BRT is implemented using diesel units. The project has a very strong potential for replication not only in Pakistan but also in other cities worldwide. The project has incorporated a proactive outreach strategy to ensure that the conditions for replication are optimal. Cities can have multiple sources of biomethane including animal waste, landfills and sewage plants and often these resources are not utilized. The incremental cost of capturing biogas and upgrading its quality to vehicle engine standard and combining it with CNG buses can be far less than using electric vehicles whilst having the same GHG and a comparable pollution impact (only NOx emissions will be higher compared to an e-bus). GCF financing is also critical to ensure a comprehensive low-carbon urban transport system including not only a modern and convenient public transport offer but also last-mile 0-emission connectivity and fostering of NMT through pedestrianization, cycle lanes and bike-sharing programs. This is an important step towards long-term low carbon transport. GCF financing is also important to cover incremental costs due to adapting the BRT infrastructure to increased climate risks. D.2. Exit Strategy Once constructed, the BRT system is expected to be financially sustainable over its operating life. The BRT operational plan was designed to ensure that revenue generated from the system will adequately cover system operations and maintenance costs, eliminating the need for operational subsidies. The results show that using biomethane improves the system’s financial performance. In most scenarios, the future financial position of TransKarachi confirms solid net cash flows as well as its financial capacity to cover recurrent costs to sustain the facilities developed under the project. The future outlook on public transport demand in Karachi gives confidence that the demand for the BRT will rise as it is expected that the number of motorized trips will increase and the establishment of various BRT lines will result in an attractive network for clients who will increasingly not only be from the traditional existing bus service but also from private means of transport due to the convenience and speed of the BRT system.

EXPECTED PERFORMANCE AGAINST INVESTMENT CRITERIA


E

E.1. Impact Potential Potential of the project/programme to contribute to the achievement of the Fund’s objectives and result areas E.1.1. Mitigation / adaptation impact potential

The project has a direct GHG reduction potential estimated at 2.6 million tCO2e (tank-to wheel) over the project lifetime of 30 years. Mitigation investments are for biomethane hybrid buses, production of biomethane for transport usage, the establishment of the BRT system with high efficiency buses resulting in mode shift and improved efficiency of public transport and the establishment of NMT facilities including bike lanes, bike sharing and last-mile connectivity e-pedicabs. Around 75% of the impact is due to the BRT system directly and 25% due to usage of biomethane hybrid buses. Within the BRT system 95% of emission reductions are due to usage of more efficient buses (larger units, improved average load factor, lower fuel consumption), 3% due to mode shift from passenger cars, and 1% each due to mode shift from motorcycles and motorized rickshaws. The project impact on adaptation is an improvement of the climate resilience of the BRT infrastructure primarily through an increased water retention capacity and slow infiltration, the utilization of lane strips with a median filtration system, the utilization of bio-swales along corridors, the adding of drainage capacity, vegetation in station verge, bioswale strip as delineator path and permeable pavements for pedestrian paths and cycle ways. The program will lock-in long-lived low emission infrastructure including a climate resilient BRT route, biking facilities, and a biogas plant which also ensures that additional and replacement buses will be 0-emission units. The project will benefit directly 1.5 million inhabitants living within 1 km from a BRT station (including off-corridor services).

E.1.2. Key impact potential indicator

Provide specific numerical values for the indicators below.

GCF core indicators

Expected tonnes of carbon dioxide equivalent (t CO2 eq) to be reduced or avoided (Mitigation only)

Annual 87,000 tCO2e

Lifetime 30 years

• Expected total number of direct and indirect beneficiaries, disaggregated by gender (reduced vulnerability or increased resilience);

• Number of beneficiaries relative to total population, disaggregated by gender (adaptation only)

Total 1.5 million27

Percentage (%)

7% of the population of metropolitan Karachi

27 People within 1km of a BRT station. The daily passenger number is not equivalent to the beneficiaries as different people use the system over time.



E Other relevant indicators

• Improved air quality in Karachi through an annual reduction of 723 tons of NOx, 5.5 tons of PM2.5 and 9.5 tons of SO2improving the health of Karachi’s citizens.

• Improved city livability through less noise, pedestrianization and safe cycling. • Major time savings for residents of Karachi estimated at 59 MUSD per annum. • Reduced fatalities and injuries from accidents due to safer bus access, bike lanes, mode switch

towards public transport and a better regulated bus sector stopping at designated stations. • Increased access of female passengers to public transport increasing the share of female

passengers from currently less than 10% to 20%. The project will establish universal access and safety features for women, children, and the disabled in all 28 BRT stations.

• A modern BRT system operating at a maximum 6-minute headway over a network of 125km in length with a daily ridership of 320,000 passengers.

The methodological base for GHG reduction calculations relies on the UNFCCC approach for mode shift towards Mass Transit Systems which is based on the approved CDM methodology ACM0016. Following are the major elements used for calculating the GHG reduction:

a). Number of expected passengers for the BRT system;

b). Expected share of passengers in the BRT system from baseline modes of transport and their average trip distance per baseline mode. The projected modal share is based on a transport model and the trip distances are based on surveys.

c). Emission factors per passenger-km for different modes of transport based on specific fuel consumption per mode, the Net Calorific Value (NCV), and the EFCO2 per fuel type, methane slip with the GWP of CH4 for CNG vehicles and average occupation rates per mode. A TTW and a WTW approach is used. Direct emissions stated in the document for the GCF only include TTW emissions.

Emission reductions are calculated based on the differential emissions per passenger using baseline modes of transit and the project emission factor per passenger multiplied with the activity level (number of passengers). The comparison case for public transport (i.e. the Business-as-Usual scenario or baseline) is a continuation of the current public transport system. The project infrastructure life-time is 30 years. Local pollutants considered, due to their impact on local air quality, are PM2.5, SO2 and NOx. Only combustion related emissions are included. PM2.5 and NOx pollutants are determined based on the emission standard of the vehicle and emissions per unit of distance driven using the European emission model COPERT28 whilst SO2 is based on the sulfur contents of fuel and the specific fuel usage.

28 EEA, 2016, Air pollutant emission inventory guidebook

1. Emission Factor per km per vehicle category

EFkm Emission factor per km

SFCi Specific fuel consumption of vehicle using fuel type i

NCVi Net Calorific Value of fuel type i

EFCO2,i CO2 emission factor of fuel type i

Ni/N Share of vehicles using fuel type i

EFCH4 CO2 equivalent emissions of CH4 emissions of gaseous powered vehicles

𝐸𝐹𝑘𝑚 = �𝑆𝐹𝐶𝑖 × 𝑁𝐶𝑉𝑖 × 𝐸𝐹𝐶𝑂2,𝑖 ×𝑁𝑖𝑁 + 𝐸𝐹𝐶𝐻4

𝑛



E Fuel consumption data is based on measurements realized in Pakistan (for conventional buses) and measurements from comparable cities for other vehicle modes.

Direct GHG emissions also include for gaseous vehicles methane slip. This is a relevant emission source. Methane slip is determined based on average reported values of the ICCT which summarizes different sources. Leakage of unburnt methane is important due to the high Global Warming Potential (GWP) of CH4. Methane slip is caused within the vehicle in the crankcase and the exhaust pipe and "upstream" due to leaks in the gas pumps and wells.

Increased particle emissions result not only in a worsening air quality but also in higher Black Carbon (BC) emissions. BC is part of particulate matter (PM) from diesel engines. The GHG impact of BC is determined based on the mass of PM2.5 emissions (using the European emission model COPERT), the fraction of BC in PM2.5 and the GWP100 of BC.

Occupation rates are based on recently realized visual occupation studies performed in Karachi.

The following table shows main input data used and its source.

2. Emission Factor per passenger-km per vehicle category

EFpkm Emission factor per pkm

EFkm Emission factor per km per vehcile categoryOC Occupation rate of the vehicle category

𝐸𝐹𝑝𝑘𝑚 =𝐸𝐹𝑘𝑚𝑂𝐶

3. Baseline (BAU) emissions

BE Baseline emissionsEFpkm,x Emission factor per passenger-km of transport mode (idem vehicle category) xTD Trip distance of passengers (if available per mode category)Sx Share of passengers which would have used mode (vehicle category) x in absence of the project P Passengers transported by the project

𝐵𝐸 = �𝐸𝐹𝑝𝑘𝑚,𝑥 ×𝑥

𝑇𝐷× 𝑆𝑥× 𝑃



E

97% of passengers are assumed to be from the traditional bus system i.e. a very limited mode switch of 3% is assumed. This is very conservative and reflects todays situation. However, in the future with increased motorization and congestion rates and with the establishment of a comprehensive BRT network it can be expected that mode shift will be substantially higher (e.g. other BRT systems worldwide with monitoring of passenger baseline modes have experienced mode shift of up to 20% from passenger cars, motorcycles and taxis29).

29 See e.g. CDM project BRT Chongqing or BRT Zhengzhou with >20% mode shift from taxis and passenger cars; BRT Transmilenio registered mode shifts in the order of 10% from taxis and passenger cars. All monitoring reports of CDM BRT projects which include actual mode shift data is available publicly under https://cdm.unfccc.int/Projects/projsearch.html

Trip ParametersParameter Value UnitPassengers from minibus 51%Passengers from coach 16%Passengers from large bus 30%Passengers from motorcycle 1%Passengers from passenger car 1%Passengers from rickshaw 1%Average trip distance minibus passengers 5.1 kmAverage trip distance coach passengers 5.0 kmAverage trip distance large bus passengers 6.4 kmAverage trip distance motorcycle passengers 8.0 kmAverage trip distance passenger car passengers 8.6 kmAverage trip distance rickshaw passengers 4.9 kmProject commercial lifespan 30 years

Annual passengers yr 1 142,741,932 passengers

CAGR passenger growth 2.61%Lifespan buses 12 years

Source

Infrastructure lifetimeLogit, 2018, financial model, daily to annual passenger conversion factor of 309 (Logit, 2018, ODBM, table 1)PC-1 Economic Analysis

Logit, 2018, Transport model system ridership for base year 2017 based on pkm/vkm

Logit, 2018, Transport model system ridership for base year 2017 based on pkm and boarding taking into account average boarding per passenger



E

The following figure compares the Emission Factor (EF) per passenger-kilometer of different modes of transport operating currently (baseline) in Karachi.

Baseline Modes of Transport

RickshawsParameter Value Unit

Specific fuel consumption CNG rickshaws 6.3 m3/100km

Occupation rate rickshaws 0.96 passengersNOx emissions rickshaw 0.5 g/km

Current BusesParameter Value Unit

Specific fuel consumption standard 12m CNG bus 94 m3/100km

Specific fuel consumption minibus and coach CNG 71 m3/100km

Specific fuel consumption standard 12m diesel bus 66 l/100km

Specific fuel consumption minibus and coach diesel 50 l/100km

Share CNG buses 60%Share Minibus 47%Share coach 32%Share large bus 20%Occupation rate minibus 21 passengersOccupation rate coaches 21 passengersOccupation rate large bus 23 passengersBC fraction Euro II HDVs 65%PM2.5 emission diesel Euro II urban bus 0.27 g/kmNOx emission diesel Euro II urban bus 14.6 g/kmNOx emission CNG Euro II urban bus 15 g/km

Indian emission standard year 2010 onwards for 3-wheelers

Source

Source

Logit, 2018, ODBM, Vol.1, table 3.3 excludes driver

Grutter Consulting, 2016 based on data of rickshaw operators in Dhaka, Bangladesh; 100% of rickshaws use CNG

COPERT, 2016, table 3-23, Tier 2 appoach

Based on measurements of buses realized in Peshawar by SGS, 2017Based on relative fuel consumption of mini-bus/coach versus standard bus Euro II diesel based on COPERT, 2016

Logit, 2018, ODBM, Vol.1, table 3.3


Based on measurements of buses realized in Peshawar by SGS, 2017

Based on relative fuel consumption of mini-bus/coach versus standard bus Euro II diesel based on COPERT, 2016ADB, 2018

EEA, 2016, tabla 3-117COPERT, 2016, Tier 3 with 50% load factor, 0% gradient, speed 15km/h

Passenger carsParameter Value UnitSpecific fuel consumption gasoline cars 8.9 l/100kmOccupation rate passenger car 1.7NOx emissions Euro 2 gasoline passenger cars 0.3 g/km

MotorcycleParameter Value Unit

Specific fuel consumption gasoline 2.7 l/100km

Occupation rate motorcycle 1.4

COPERT, 2016, Table 3-27, Tier 2 for Euro 1 and later 1.4 to 2.0 l

COPERT, 2016, Table 3-17, Tier 2 for Euro 2 1.4 to 2.0 l

SourceAverage between values monitored in Delhi (scooters, 70cc, 4-stroke; realized by Grutter Consulting, 2011) and data for Hanoi based on World Bank, 2014; engine capacity 110-125cc; 4-stroke; the fuel efficiency standard for 100-125cc motorcycles in PR China is 2.5l/100km (https://www.transportpolicy.net/standard/china-motorcycles-fuel-consumption/)Logit, 2018, ODBM, Vol.1, table 3.3

Source




E The average baseline emissions per BRT passenger are based on the expected modal share and the trip distance per baseline mode. This corresponds to the average emissions the passenger would have realized in absence of the BRT for his/her trip. The following figure compares the baseline emissions per trip per passenger for the baseline and for different technology alternatives for BRT buses.

With any of the technologies the BRT system will reduce emissions per passenger transported with a TTW as well as WTW approach. The emission reductions are due to30:

• Usage of larger buses (main reason; BRT buses are basically 12m and 18m units whilst baseline buses includes many minibuses).

• Improved average occupation rates of buses due to improved system and dispatch management. • New technology of buses together with increased operational speed resulting in improved efficiency resulting

in lower emissions per unit of distance. • Mode shift from passenger cars, rickshaws and motorcycles. This is of minor importance in terms of emissions

reductions as it is assumed that 97% of passengers are from the traditional bus-based public transport system. The baseline data used for ex-ante calculations is based on a transport model realized by Logit for Karachi. The model includes the baseline trip distances per mode of transport, the projected mode shift for BRT users and, based on extensive surveys, the average occupation rate of modes of transport as used in Karachi. Potential leakage sources of the BRT which have been addressed in accordance with the UNFCCC CDM methodology ACM0016 used for this project include: a). Load factor change leakage: this refers to change of load factor of buses and taxis/rickshaws. The projected mode shift from rickshaws is with 1% marginal and therefore no leakage of load factors rickshaws is included as the project impact is negligible. A reduced mode share of buses is counteracted by scrapping buses through the project and by including current bus operators as operators of the BRT lines. In accordance with the experience of other BRTs no load factor change of the existing bus operators is thus expected. b). Increased upstream gaseous fuel emissions: the project uses biomethane. Only conventional buses use fossil gaseous fuels. Therefore, upstream fossil gaseous emissions will reduce and not increase. Leakage would thus be positive and not negative (for leakage of the biogas plant see section on biogas plant). c). Congestion change resulting in speed change or rebound effect. Based on ACM0016 no leakage through the project can be expected as the project does not reduce the additional road capacity available to individual motorised transport mode (mixed routes are liberated from buses).

30for more details see the GHG report in File 3 and the excel calculation sheet in File 6



E A potential rebound effect of the BRT due to people moving their homes or their workspace due to the BRT is monitored ex-post through passenger surveys based on ACM0016 determining thereafter additional trip emissions. The experience of monitoring of existing transit systems based on ACM0016 (e.g. Delhi metro, BRT Edomex, BRT Insurgentes Mexico) has shown that this potential leakage effect in practice is 0 or negative i.e. emissions of people who have moved their workplace or living space due to such projects have decreased and not increased. However, this will be monitored through surveys for Karachi. Other potential leakage sources addressed by the project, albeit not part of the CDM methodology for BRTs are: a). Construction related emissions: The BRT construction results in limited construction emissions. However, in absence of the project the traditional modes of transport would also require sufficient road space and due to usage of smaller buses as well as private vehicles in the baseline scenario the required additional road space and therefore construction emissions would be higher under a baseline than under a project scenario. This specific case was addressed by the Methodology Panel and the Executive Board of the UNFCCC when revising the CDM methodology AM0031 and approving the consolidated methodology ACM0016 in 2010. Whilst formerly the methodology AM0031 had included leakage emissions from construction of a BRT this leakage source was explicitly removed by the UNFCCC from leakage calculations for all mass rapid transit systems (AM0031 Version 3 and onwards and ACM0016) due to the fact that baseline construction leakage is significantly higher than project construction emissions. Therefore, no construction emissions are included in this project accordance with UNFCCC practice. b). Leakage due to additional business activity on the BRT route. The Resettlement Plan mainly addresses informal vendors and hawkers along the BRT corridor, which will be impacted by the Project. These “businesses” (estimated around 500 units) are very basic in nature and do not have any fixed structures, but rather are rendered in temporary or moving structures (small karts, etc.). The Project Design incorporates new locations for organized open-air markets in strategic locations along the corridor, where these informal businesses will be relocated. The BRT infrastructure will include more formalized businesses in the form of small kiosks and shops placed in the access bridges or underpasses to the high-demand BRT stations. A commercial area has also been planned in the staging facility in Numaish where an entire floor area will be dedicated to the commercial activities, bringing more non-fare revenues to the BRT system, therefore enhancing the financial sustainability. Overall, the number of businesses should not increase significantly. Any additional business could be from other sites and not additional businesses. Having higher density of businesses and housing on or near to mass transit routes is one of the core objectives of transit oriented development as it shifts people towards shorter trips, less trips (more different business types are located at the same point) and usage of modes with lower levels of emissions (public transport). Therefore, any increase in business activity along a BRT route and increased business and work density would point towards a more efficient city structure and lower emissions i.e. this factor results in a positive leakage increasing even more emission reductions. The BRT itself is not lower cost of transport than conventional transport. Total economic activity is thus not increased within the city and additional business volumes along the BRT route would mean reduced business activities in other zones but with the positive impact of reduced emissions due to the proximity of the BRT. The monitoring reports provided by the project will ex-post monitor the actual GHG reductions using as monitoring approach the approved CDM methodology ACM0016 (last available version). The corresponding passenger surveys have been included in the budget. e-pedicabs consume, based on the experience in Nepal with similar units, 0.5 kWh per day of operations. Based on 300 e-pedicabs operating 330 days per annum this results in 52,500kWh per annum equivalent to 26 tons CO2 based on the electricity grid factor of Pakistan of 0,5 kgCO2/kWh for 201731. 26tCO2 represent 0.03% of estimated emission reductions which is considered negligible and outside the precision range of calculations performed. Emission reductions due to NMT and e-pedicab usage have not been included which is conservative based on very

31based on net electricity production (total minus losses) of 91,776,000 MWh and 45,500,000 tCO2 for electricity production see OECD/IEA (2017).



E low project emissions whilst baseline emissions of other means of transportation replaced cannot be estimated ex-ante in a reliable manner and have therefore not been accounted for. Comparison with other BRT systems GHG EFs of baseline modes are comparable to other cities, especially if operating informal bus systems using also many minibuses. The GHG emissions of the project is 0 due to usage of biomethane-hybrid buses. The estimated mode shift of the project is very low compared to values monitored ex-post in other BRT systems including such in Colombia, Mexico, and PR China. However, at least initially, this is not surprising due to the income level and the still relatively low degree of private motorization in Karachi. The calculation methodology corresponds to best practice and has been approved by the UNFCCC for this type of project. Data used is recent, local and robust. Output values are comparable to other BRT systems worldwide whilst being very conservative for mode shift i.e. potentially underestimating the GHG impact. Calculations do not include the increased usage of NMT due to cycle-lanes, the impact of the bike-sharing system and the impact of e-pedicabs for last-mile connectivity as no robust data and assumption base exists for such calculations for cities like Karachi. This situation shall be amended by the project through its incorporated GHG monitoring system. The overall impact for a BRT is relatively high compared to other BRT systems worldwide basically due to usage of 0-emission biomethane powered hybrid buses. Biogas Facility The biogas facility uses cattle manure available in large quantities in the larger urban zone of Karachi. The biogas is produced on-site i.e. the waste needs not be transported thereby causing no transport and collection emissions. All electricity used to power the biogas facility is produced with a generator powered by biogas i.e. no upstream GHG electricity emissions occur. The plant requires no fossil fuel. The biogas is then transported per pipeline using a biogas powered compressor to the site for distribution for the buses without using fossil fuel for transport. The biogas plant is therefore 0-emission and the biomethane used by buses also 0-emission. Under BAU the manure rots partially on site whilst the larger amount is deposed of in the adjacent bay. This creates methane released to the atmosphere – however, no measurement or estimation of the amount of CH4 released under BAU has been made and therefore no claim on reducing methane emissions with the biogas plant is made. Biogas used has the same propensities including energy value as compressed natural gas (“gas sweeting” to 90% methane content). This is required by the manufacturers of the buses. The biomethane is therefore upgraded and “cleaned” to achieve CNG levels prior injection into the gas pipeline i.e. 1 m3 of biomethane is equivalent from the energy contents to 1m3 of CNG. The investment in this upgrading is included in the project (gas upgrading and H2S scrubber worth around 3 MUSD). Project emissions from the pipeline are 0 as biogas is used for the compressor to transport the biogas in the pipeline. Leakage from the pipeline is not included. In the baseline the pipeline transports CNG resulting in leakage (the pipeline used is <25km i.e. also in case of the baseline leakage is marginal) and in the project case biomethane transported would have gone to the atmosphere anyway (just not in the pipeline but at the disposal site. If the pipeline should not be used but trucks the calculated emissions from trucks are <50tCO2 per annum32. In the baseline diesel fuel is also transported by truck from the refinery to the petrol stations causing far higher GHG emissions not accounted for (the distance to the refinery is >50km round-trip). Therefore pipeline leakage due to the

32based on 68,000m3/d, 365d/a, 50km return trip, 15t load truck, 40l/100km SFC



E project is net negative as CNG methane leakage is redcued and biomethane leakage is not additional to what occurred in absence of the project. The GHG baseline conditions including COD and temperature of the lagoon have not been monitored yet. Therefore, the project does not claim any additional avoided methane emissions from the manure. However, the lagoon baseline conditions will be assessed (see budget in component 4) and estimates of avoided GHG emissions from the biogas plant will be made using the UNFCCC methodology AMS.III.H33. Also, the monitoring reports will be based on this methodology including the methodological Tool 04 “Emissions from solid waste disposal sites” for potential leakage from sludge and the methodological tool “project emissions from flaring” to determine potential flaring emissions. As mentioned previously however, the project does currently NOT claim any GHG reductions from avoided methane emissions from the baseline manure and effluents i.e. all monitoring efforts realized will result in being able to quantify additional GHG reductions not claimed currently due to lack of data measurements.

E.2. Paradigm Shift Potential Degree to which the proposed activity can catalyze impact beyond a one-off project/programme investment E.2.1. Potential for scaling up and replication (Provide a numerical multiple and supporting rationale)

The theory of change is shown in the figure below.

33AMSIIID for animal manure management systems states clearly that AMSIIIH shall be used if the manure is discharged into natural water resources



E Replication Potential General The project has basically two novel approaches which have a significant replication potential: a). Usage of biomethane hybrid buses reducing the amount of biomethane required and resulting in 0-emission bus fleets with very low local pollution levels. Biomethane usage is not new (e.g. the BRT Copenhagen to uses since 2017 37 articulated biogas buses). However, using biomethane in developing country cities for urban buses on a non-pilot scale is a novelty. Combing biomethane with hybrid buses for a BRT is a world 1st. This combination is considered critical as biomethane is relatively scarce in urban settings, can be costly to produce and buses use a large amount of energy. In Basel e.g., the usage of biogas buses was stopped as the operator wanted to have only one bus technology and available biogas was insufficient. With hybrid buses this problem could have been resolved. b). Implementation of NMT facilities including cycle-lanes and e-pedicabs. This is integrated into the BRT system. A good monitoring of the impact of this approach will allow for improved planning and dissemination in other cities. Replication Scale The project has 3 levels or stages of replication: a). Within Karachi: A complete BRT system consisting of various BRT lines shall be established. The Transport Master Plan includes next to the project line (red line) 5 other BRT lines, 2 of which are also included for pre-feasibility within this project. Using the same approach and assuming comparable ridership levels for the other BRT lines annual GHG emission reductions could increase to more than 500,000 tCO2 (TTW). The biogas facility could be expanded and would have sufficient capacity to cover 100% of demand with biomethane hybrid units. b). Other cities in Pakistan: Based on the 2017 census Pakistan has 25 cities with more than 250,000 inhabitants and 10 with more than 1 million which could opt for a BRT system. Biogas is available in all cities either from landfills, sewage plants, agro-industries or from animal waste. Pakistan wants to build more BRT systems whilst some cities might opt for lighter versions without fully dedicated lanes but still using 0-emission buses as well as other features of a modern mass transit system. The project has thus a significant national replication potential. Based on 10 other cities establishing at least one line the replication potential is factor 10 of estimated direct emission reductions. c). International: BRTs are being established in many cities worldwide. However, concerning bus technologies BRTs have not proven to be innovative relying either on diesel or on fossil CNG buses. Many cities are looking at electric buses without considering the potential of using biomethane and thereby also achieving 0-emission units. The project therefore considers that it has a significant replication potential also for other cities planning BRT systems. Steps Proposed to Achieve Replication a). High quality monitoring of impacts of the program, operational problems, and performance in environmental, financial and risk terms. This shall allow for a high-quality database on what can be expected if such a system is established, potential operational difficulties and how these are overcome. Bus performance will be directly monitored through on-board equipment which also allows to determine the energy savings due to usage of hybrid technology and also allows to optimize bus performance. b). Professional reporting and publication of results using e.g. ADB publication series or webinars. A detailed plan for the monitoring and replication cell at the project is found in File 6 sheet “outreach”. E.2.2. Potential for knowledge and learning



E The tender process for bus procurement will include a training component for mechanics on hybrid technology to be provided for by the bus supplier(s). Upgrading the training of mechanics not only allows to maintain and repair better buses but all types of hybrid vehicles thus having an impact also on passenger cars and taxis in the future. The GHG monitoring and reporting unit will produce know-how tools and reports on biogas production for transport, on low carbon buses and on NMT fostering within urban public transport systems. These knowledge tools will be widely disseminated.



E E.2.3. Contribution to the creation of an enabling environment

The project promotes various new technologies not yet in usage in Pakistan which can contribute towards mitigating considerably GHG emissions and reducing the vulnerability of urban infrastructure to climate change:

a). Hybrid buses powered by biomethane are new to Pakistan. CNG buses are widely used.2018 the country has procured within an ADB project in Peshawar diesel plug-in hybrid buses. O-emission units and gas-hybrids are however new and powering buses with biomethane has not yet been realized in Pakistan. Pakistan has however a considerable biogas potential and could use this in a cost-effective manner especially for urban transport.

b). Large scale biogas plants are not common in Pakistan with the 1st being put in operation end 2016 in Punjab34. Biogas plants to the moment however use their gas for electricity production and not for transport. To use biogas with vehicles it needs to purified or upgraded (CO2 removal) to natural gas quality (then mostly referred to as “biomethane”), with a high CH4 content (at least 90%) and a low share of impurities.

c). NMT promotion including cycle lanes, bike sharing as well as -pedicabs are novel for Pakistan. E-pedicabs can provide for low carbon last-mile services convenient for the user as well as for the provider of the service.

d). One of the core adaptation measures taken is to implement lane strips which reduce busway drainage requirements due to middle swale, reduce busway noise levels by approximately 40% and increase green space not sealed with concrete. Lane strips are more demanding concerning concrete quality and durability to avoid cracking at ends and require companies which can perform this work with a consistent high quality. This pushes also construction industry towards improving quality from which also other construction areas can profit.

E.2.4. Contribution to regulatory framework and policies The institutional structure has been improved by the establishment of the SMTA and TransKarachi, which will manage and control the overall quality of the BRT system’s operations. The system’s quality will be enhanced by maximizing the use of private sector contracts for system operations. TransKarachi will specifically oversee private sector contracts to companies for (i) bus operations; (ii) system control, encompassing fare system, station services, and bicycle sharing system; (iii) the financial clearinghouse; and (iv) commercial services such as property management and advertising. This is a big step forward from informal and non-regulated public transport towards an efficient and regulated public transport sector which allows to enforce certain standards. The SMTA and the Government of Sindh’s Transport and Mass-Transit Department (TMTD) will also implement an action plan to build a robust financial management system and procurement capacity within TransKarachi, notably through the engagement of consultants to provide training and support during project implementation.

34https://www.bioenergy-news.com/display_news/11484/pakistan_inaugurates_first_commercialscale_biogas_plant/



E E.3. Sustainable Development Potential Wider benefits and priorities E.3.1. Environmental, social and economic co-benefits, including gender-sensitive development impact

Environmental Impacts with Health Implications The project has due to usage of biomethane hybrid buses and mode switch a positive impact on air quality by reducing annually on average 5.5 tPM2.5, 723 tNOx and 9.5 tSO2. The avoided health costs due to reduced air pollution are estimated in cumulative 7 MUSD (based on the cost of pollutants for Pakistan estimated by the IMF)35. The project also results in less noise due to mode shift, increased usage of NMT and hybrid buses. Latter have approximately 3dB less noise compared to a same fuel conventional bus basically when starting from a bus stop36. The cattle colony in Karachi is Asia’s largest cattle colony with 400,000 animals creating 7,200 tons of manure a day. It meets 70% milk and half of the beef demand of Karachi’s population and provides livelihood to a large number of workers but faces daunting problems of waste disposal and environmental degradation. Out of a total of 3,500t of animal dung a day, 3,250t of this waste falls on concrete floors and 250t are dropped on soft ground — to be picked later on for use as fertiliser. The fallen dung on concrete floors is drained into the Arabian Sea through seven main drains using 50,000 tons of ground- and freshwater a day. Besides wastage of a huge quantity of freshwater, this has repercussions for marine life. The dung left on the soft ground produces an unbearable stench and becomes a breeding ground for mosquitoes and other pests37. The biogas plant will reduce freshwater usage whilst reducing massively the discharge of effluents to the Arabian Sea and reducing problems of odor and mosquitos. Social and Gender Impacts The project will benefit Karachi’s estimated population of 14.9 million, 75% of whom are poor or low income, through increased access to safe, reliable, and affordable public transport. The BRT has time savings benefits for both BRT passengers and the remaining mixed traffic (latter due to reduce congestion) which is estimated at more than 59 MUSD per annum. The BRT has also safety benefits from reduced fatalities and injuries due to improved traffic management, improved safety for pedestrians and cyclists and a safe boarding and de-boarding process at bus stops. The project will establish universal access and safety features for women, children, and the disabled in all 28 BRT stations and their accesses, including proper lighting and monitoring through closed-circuit television cameras; and in buses, including segregated areas for women, and staff trained to deal with harassment incidents. Through these measures the percent of female passengers on the BRT shall be increased to minimum 20% compared to the baseline situation of 10%38. Categorized as effective gender mainstreaming, the project will encourage women’s meaningful participation by ensuring that 10% of BRT operations employees and TransKarachi staff are women. Economic Impacts The economic impacts are basically time savings, savings from vehicle operating costs and environmental health related savings resulting in total in a positive EIRR of the project. Overall, the project is expected to generate 2,130 jobs directly through future BRT operations, including 1,424 jobs for station services (such as ticketing, security, and cleaning), 615 jobs in bus operations (such as driving, conducting, and mechanics), and 81 TransKarachi staff.39

35IMF, 2014, Getting Prices Right 36Clean Fleets,2014, Clean Buses – Experiences with Fuel and Technology Options 37Taken from https://tribune.com.pk/story/1169345/problems-cattle-colony/ 38The low baseline percent of female passengers in public transport is mainly due to the risk of harassment that women face in overcrowded public buses. 39Summary Poverty Reduction and Social Strategy and Gender Action Plan (see Files 4 and 5)

https://tribune.com.pk/story/1169345/problems-cattle-colony/



E

E.4. Needs of the Recipient Vulnerability and financing needs of the beneficiary country and population E.4.1. Vulnerability of country and beneficiary groups (Adaptation only) Pakistan is ranked number seven in the Long-Term Climate Risk Index (1997-2006 averages) with losses amounting to 0.6% of GDP equivalent to 3.8 billion US$40.Climate change will place greater pressure on the existing constraints in urban development and planning common to cities in Sindh, Pakistan. The major climate risk directly related to the BRT is thereby the increase of the future severity of storms with intense precipitation events and an increase in the number of very hot days and heat waves. The BRT project will contribute to address the flooding vulnerability resulting from the adverse impacts of climate change. The drainage system which is an integral part of the BRT infrastructure and the urban roads will be carefully designed to adapt to this flooding risk. E.4.2. Financial, economic, social and institutional needs

Pakistan is a lower middle-income country, and the world’s sixth most populous country. Half of the population still lives either in absolute poverty or is vulnerable to it. Karachi is the largest city in Pakistan and has been consistently ranked as one of the world’s most unlivable cities, notably because of its high congestion and pollution levels.

Karachi’s current transportation system fails to provide mobility for all and is characterized by long commuter trip times, the rise of private and paratransit modes, and the decline of public transport. Boarding the vehicles can be challenging, especially for the elderly, children, and the physically disabled. During peak commute times, it is common for passengers to sit on the roof or hang from the side of moving vehicles. The services tend to be expensive for the urban poor, as customers must pay again for each transfer between services and modes. Therefore, 40% of all trips are estimated to be still non-motorized, made on foot or bicycles. Karachi’s poorest and women would benefit from a well-designed, safe, and accessible public transport system.

Based on a recent Climate Public Expenditure and Institutional Review (CPEIR, 2015), climate change is highly threatened by changing monsoon patterns, melting glaciers, increased occurrence of extreme weather events, and decreased capacity of water reservoirs.

Pakistan has made significant progress in regaining macroeconomic stability over the past three years. Economic indicators in the first half of FY17 however suggest that pressures are mounting for both fiscal consolidation and external balances. The current account deficit will more than double in FY19 from 1.1% of GDP in FY16 and the fiscal deficit will widen from 4.5% of GDP in FY16 to 5.1% in FY18 (World Bank and IMF data) which is above the government target of maximum 3.8% and which prevents the government from addressing all needs. The debt-to-GDP ratio is 67% and Pakistan’s trade deficit sharply increased to 39% with 23.4 billion USD deficit during the first nine months of the 2017 financial year. These figures clearly show limitations of acquiring additional debt for investment in climate change mitigation measures which are financially non-profitable. The financial appetite to assume high risk investments (in terms of probability of being financially profitable) in climate change projects is thus limited and the country relies on grants and concessional loans to cover risk elements and incremental costs of climate related investments.

Component 4 of the program has significant capacity building and institutional strengthening components. It will finance the provision of technical assistance, operational costs, and capacity building in project implementation as well as in sustainable monitoring and supervising of BRT operations, fiduciary and safeguard activities, monitoring and evaluation, and financial audits.

40Ekstein et.al., 2017, Global Climate Risk Index 2018, Table 2



E E.5. Country Ownership Beneficiary country (ies) ownership of, and capacity to implement, a funded project or programme

E.5.1. Existence of a national climate strategy and coherence with existing plans and policies, including NAMAs, NAPAs and NAPs

Based on the NDC Pakistan’s GHG emissions of 2015 are 405 MtCO2e of which the energy sector contributes 186 MtCO2e or 46%. Within the energy sector transport accounts for around 25% of emissions. It is projected that total emissions will increase by 300% to 1,603 MtCO2e by 2030 with energy-related emissions growing at an average CAGR of 11% reaching 898 MtCO2e by 2030 (representing 56% of total emissions). Pakistan intends to reduce up to 20% of the projected 2030 emissions contingent upon availability of international finance. The Technology Needs Assessment (2016) of Pakistan identified the implementation of BRT systems as one of the priority technology needs in the transport sector. The perspective plan “Pakistan Vision 2025” recognizes climate change as one of its priority areas. It includes modernization of transportation as one of its 7 pillars. The National Climate Change Policy of 2012 is to ensure that climate change is mainstreamed in the economically and socially vulnerable sectors of the economy. Policy measures identified to mitigate GHG emissions in the transport sector include the development of mass transit systems in metropolitan cities, the adoption of environmentally friendly transport technologies, and encouraging non-motorized modes of travel. The Policy indicates that managing emissions in the transport sector is crucial for tackling climate change.

E.5.2. Capacity of accredited entities and executing entities to deliver

The Asian Development Bank was conceived in the early 1960s as a financial institution that would be Asian in character and foster economic growth and cooperation in Asia. ADB has 67 members of which 48 are from within Asia and the Pacific and 19 outside. Since 1966, ADB has supported Pakistan with more than USD 27 billion in investments and continues today, with ADB being one of Pakistan’s largest and most active development partners. The country partnership strategy, 2015-2019 for Pakistan is designed to support the government in improving connectivity, productivity, and access to markets and public services. It has a provisional assistance package of at least USD 1.2 billion a year on average, which will focus on infrastructure upgrades and institutional reforms. The bulk of the assistance is earmarked for infrastructure improvements in the power, transport, agriculture, and urban services sectors. ADB intends to finance the project through a loan of USD 422 million.

The Provincial Government of Sindh has within its transport and mass transport department the vision to provide safe, reliable, comfortable and affordable means of transportation to travelling public of the province by creating enabling environment for private investment in the sector leading towards development and prosperity. Sindh is one of four provinces of Pakistan with 58 million inhabitants and includes Karachi as main city. The Province of Sindh has budgeted expenditures for 2017-18 of 10.8 billion USD. The Islamic Republic of Pakistan provides for counterpart financing of the project worth 93 MUSD. Private sector participation is being considered for the BRT operations but not for construction as globally few mass transit systems recover their capital costs through revenues alone, especially as fares must be affordable and socially acceptable. Revenue-generating parking plazas along the BRT corridor have been excluded from the project scope as it is assessed that these could be financed under a public-private partnership scheme and implemented in parallel with the proposed project.

E.5.3. Engagement with NDAs, civil society organizations and other relevant stakeholders



E Sequential, parallel and comprehensive stakeholder involvement has and will continue to take place through public consultation, focus group discussion, targeted meetings, and other forms of interaction. Stakeholder consultation is done as part of the EIA effort and as such various Focus Group Discussions and socio-economic surveys have been conducted. The formal public hearing for the EIA provides the next forum for Public Consultation on the project. Following that, informal and frequent opportunities for public involvement during the course of construction is expected. Civil Service Organizations were consulted during the project planning and design stage and will remain part of the ongoing consultative process during the project’s implementation. The inclusion of vulnerable, poor, and low-income groups in consultations was ensured and will be continued through well-established grievance redress mechanisms. Complaint mechanisms under TransKarachi, with reporting centres at each bus station, will address grievances related to the BRT services, and the safety concerns of women, and children. A communication strategy will be developed to raise awareness of the BRT services. Perception surveys will also ensure participation of all segments of the population using BRT services. The project does not involve acquisition of private land and will not damage any adjacent commercial, residential, community or public structures, as the BRT will be constructed within the available width of the existing right-of-way. However, the project will have significant resettlement impacts on 795 non-titleholders vendors (owners and workers) operating roadside micro business enterprises. ADB’s Safeguard Policy regarding consultation and participation requirements have been met. A capacity building plan has been developed to build the institutional capacity of the implementing and other relevant agencies, to develop a grievance redressal mechanism and address the concerns and complaints of the displaced persons and other stakeholders. ADB emphasized engagement with the existing bus industry and established a negotiation process enabling existing operators to participate in the new BRT system. The project design includes a fleet scrapping program and compensation mechanism for nonparticipating operators. The government expressed from the early stage its interest to submit an application to the GCF for potential grant and concessional financing of the project’s climate change components. ADB had a constant interaction with the Ministry of Climate Change and also discussed the elements of the financial proposal with the NDA. E.6. Efficiency and Effectiveness Economic and, if appropriate, financial soundness of the project/programme E.6.1. Cost-effectiveness and efficiency

Approach Financial Structure and GCF Involvement BRT and adjacent infrastructure (e.g. cycle lanes, pedestrianization) whose amortization is in the range of 30 years is considered a public goods and shall be financed by public funds. Private sector participation is being considered for the BRT operations, but not for construction as globally few mass transit systems recover their capital costs through revenues alone, especially as fares must be affordable and socially acceptable. Revenue-generating parking plazas along the BRT corridor have been excluded from the project scope as it is assessed that these could be financed under a public-private partnership scheme and implemented in parallel with the proposed project. The investment in buses and the biogas facility is done upfront by TransKarachi, who has the full ownership of the project and assets. The strategy is to realize upfront investment subsidies and then turn over the assets to private operators (buses as well as biogas facility) which recover their operational costs with tariffs (in the case of buses) and the sale of biogas (for the biogas facility). This allows to reduce the need for operational subsidies and improves the financial stability of the system. Operational subsidies are politically sensitive and can result in annually renewed discussions whilst upfront subsidies reduce this problem. Also, upfront government purchase allows for uniform purchase.



E TransKarachi realizes the contracts with bus suppliers including a 3-year period of maintenance oversight and spare parts (standard is a 1-year warranty). The responsible for maintenance is the bus operator who however receives maintenance oversight and training during 3 years. This ensures appropriate training and capacity building of local operators to maintain buses over their entire lifespan. Leasing contracts with bus operators are managed by TransKarachi. TransKarachi intends to realize a Build Operate Transfer contract for the biogas facility. TransKarachi is the developer, final owner and financier, whilst operations are managed with a PPP. The producer or source of the waste are the cattle owners whilst the owner of the waste is legally the Sindh Solid Waste Management Board (SSWMB). The biogas is transported through the existing pipeline to gas stations at the bus depot based on a loan and supply contract with the Sui Southern Gas Pipeline with the offtaker being the bus operators. TransKarachi will make a contract with SSWMB to own, construct and operate the biogas facility specifying compensations for the usage of the cattle waste. SSWMB as well as TransKarachi are public entities reducing the risks of claims for receiving more funds either from SSWMB or even from cattle owners compared to privately owned facilities once the biogas facility is running. O&M costs of the biogas facility are fully covered by the biomethane price charged to bus operator. The biomethane price shall be as low as possible to avoid operational subsidies to the BRT. The project improves sustainability of the BRT system by avoiding the necessity for operational subsidies. The biomethane price is not regulated but must be competitive to the CNG price. It is foreseen that a (low) fixed price for the BRT will be fixed by TransKarachi plus a (higher) price (competitive to the CNG price which is dependent on the international gas price) for the surplus to be sold to other offtakers. The investment for the biogas facility is, similar to the buses, a one-off investment at the start. This again allows to improve the financial sustainability of the BRT due to lower gas price.GCF funding is structured based on 2 main criteria:

• Concessional loan for incremental CAPEX of components which go beyond a standard BRT but have the potential of being financially profitable. This is for the biogas facility and for the BRT buses.

• Grants for investments which are additional to a standard BRT for costs which are not recovered through additional revenues. This includes bike sharing and e-pedicabs, and adaptation investments

• Grants for monitoring, reporting and outreach measures which allow for a massive replication of the project. The above criteria ensure that GCF funding does not crowd out other funding. Efficiency and Effectiveness Table 3: Effectiveness of GCF Investment

Direct GHG impact in tCO2e 2,610,000 Investment GCF in MUSD 49 GHG abatement cost direct in USD/tCO2e avoided 19

See section E.6.5. for a methodological explanation and a comparison with other projects.

E.6.2. Co-financing, leveraging and mobilized long-term investments (mitigation only)

Total amount of co-finance: 534.5 MUSD Total project finance: 583.5 MUSD Co-financing ratio: 10.9

E.6.3. Financial viability



E The project aims to provide a high frequency transit service, replacing informal modes of transport travelling in mixed traffic, with fuel-efficient BRT vehicles travelling in segregated lanes at high speeds. In the first year of BRT operations the demand is expected to be 320,000 passengers per day. By 2021, savings from vehicle operating costs are expected to reach 3 MUSD per year, while time savings benefits for both BRT passengers and the remaining mixed traffic will reach 59 MUSD per year. Safety benefits from reduced fatalities and injuries and reduced emissions save 16 MUSD per year. The economic analysis yielded an EIRR of 18%, demonstrating the project’s economic viability. To ensure a robust result, three sensitivity tests were conducted for the following scenarios: (i) a 20% capital cost overrun, (ii) a 20% reduction in passenger ridership, and (iii) a 2-year delay in system operationalization. All scenarios meet the 9% minimum economic yield required for an ADB-financed project. The BRT operational plan was designed to ensure that revenue generated from the system will adequately cover system operations and maintenance costs, eliminating the need for operational subsidies. Public finance is used for the infrastructure investment which is considered a public good and not repaid. The BRT system generates revenue from (i) fares, with distance-based fares set at PRs 15 to PRs 55, and averaging PRs 29; (ii) advertising; and (iii) rent on concessions storefronts in stations and depots. In the absence of a cost recovery tariff, a conventional financial evaluation based on cash flow analysis leading to the computation of a FIRR is not considered appropriate.41 Instead, a financial model was developed to confirm that revenues will cover operating costs in various scenarios. The results show that using CNG from locally produced biofuel significantly improves the system’s financial performance, which led to include the production facility under the project scope and the ADB loan. In most scenarios, the future financial position of TransKarachi confirms solid net cash flows as well as its financial capacity to cover recurrent costs to sustain the facilities developed under the project.

Infrastructure has a lifespan of 30 years and buses of 12 years. After 12 years the TCO of biomethane hybrid buses is expected to be the same as of diesel units due to drops of CAPEX of hybrid units and increase of energy prices.

E.6.4. Application of best practices

The BRT design meets in almost all respects international best practices:

• two-way fully segregated busway infrastructure; • 30-year lifetime pavement; • modern fare collection system using smart cards to enable distance-based fares; • bus station level with bus floor; • flexible operational service planning (several express services, one local and one limited-stop service); • expected high ridership along one of the most trafficked corridors; • provision of safe, accessible, comfortable stations; • establish universal access and safety features for women, children, and the disabled in all BRT stations and

their accesses, including proper lighting and monitoring through closed-circuit television cameras; • in buses segregated areas for women, and staff trained to deal with harassment incidents; • careful attention to pedestrian access and integration with other public transport; • bicycle lanes along the corridor and improved sidewalks; • on-street parking and green areas added in various locations; • last-mile connectivity with 0-emission vehicles; • heritage preservation through the improvement of historical buildings and pedestrianization along a 2-km

section of the common BRT corridor;

41The Government of Sindh will repay the loan from its own resources and will consider the capital investment (including the BRT infrastructure and initial fleet) as an upfront subsidy. Accordingly, TransKarachi will not need to repay the loan from the BRT system’s operational revenue.



E • bike-sharing system.

The BRT project goes beyond international best practices including features not used by other BRTs classified as Gold-standard design as per IDTP classification42 including 0-emission vehicles and bike sharing.

The project design is based on a comprehensive and multimodal approach with a strong focus on accessibility, safety and integration in the city. A comprehensive institutional, stakeholder, and public communication strategy is implemented to ensure ownership of the project and its success.

The bus technology used goes beyond international best practices by using biomethane-hybrid buses based on an analysis of alternative bus technologies and their financial, economic and environmental impact (see for more details section F2 and File 3).

E.6.5. Key efficiency and effectiveness indicators

GCF core indicators

Estimated cost per t CO2 eq, defined as total investment cost / expected lifetime emission reductions (mitigation only)

(a) Total project financing US$ 583.5 (b) Requested GCF amount US$ 49.0 (c) Expected lifetime emission reductions overtime Direct: 2,610,000 tCO2eq

(d) Estimated cost per tCO2eq (d = a / c) Direct: US$ 224 / tCO2eq

(e) Estimated GCF cost per tCO2eq removed (e = b / c) Direct: US$ 19/ tCO2eq

Total GCF investment is 49 MUSD of which 10 MUSD grant and 39 MUSD loan finance. Total project finance is 584 MUSD. To determine the project effectiveness and efficiency in terms of GHG abatement incremental costs should be compared with the GHG mitigation. The project investment has as major target to transport persons and is financed and has its economic profitability as well as economic and financial returns based on the transportation of persons. To relate GHG reductions with the total project investment is methodologically misleading as it discards other investment returns and wrongly assumes that the entire project investment is only made due to GHG reductions. The approach used is therefore based on the incremental CAPEX related to the GHG mitigation. For bus technologies the appropriate methodological approach is to relate incremental total costs of ownership with the incremental GHG reduction per technology compared to the baseline technology. This has been made in section F1. For the entire project incremental CAPEX provided for by the GCF is compared to the GHG mitigation impact of the project. A robust number is to compare GCF investment with direct GHG reductions. Direct emission reductions accrue due to the project implementation. They are calculated based on a conservative base and the risk of under-performance is low. GHG emission reduction calculations and the methodology used has been described in section E.1.2. Direct emission reductions include only those directly related to the project activity and are based on increased bus efficiency (usage of larger buses, better fuel efficiency, higher average load factor) accounting for 73% of GHG reductions, mode shift from cars, motorcycles and motorized rickshaws

42 https://www.itdp.org/library/standards-and-guides/the-bus-rapid-transit-standard/



E accounting for 4% of GHG reductions and the usage of biomethane-hybrid BRT buses instead of diesel units accounting for 23% of GHG reductions. A comparison with other projects is difficult as calculation approaches vary widely. Comparing total project investments with total reductions makes no sense as some projects might have no other income source and are purely made due to GHG reduction whilst other projects, including this one, have a huge investment but also a large income source. Therefore, an incremental cost approach should be used to determine the cost of mitigating GHG emissions. Further details are included in File 3 and the calculation sheet File 6.

Expected volume of finance to be leveraged by the proposed project/programme and as a result of the Fund’s financing, disaggregated by public and private sources (mitigation only)

A breakdown of how the GCF financing of $49 million is going to be leveraged by the BRT project is illustrated below and broken down by cost component. All funds are public funds. No private capital investment is used.

• ADB: 442 MUSD (83% of co-financing); 100% loan • Islamic Republic of Pakistan: 92.5 MUSD (17% of co-financing); 100% grant • Total co-financing: 534.5 MUSD

Total amount of GCF funding: 49 MUSD Total project finance: 583.5 MUSD Co-financing ratio: 10.9

Other relevant indicators (e.g. estimated cost per co-benefit generated as a result of the project/programme)

APPRAISAL SUMMARY


F

F.1. Economic and Financial Analysis

Project General

Economic Analysis43

The costs and benefits of the with-project scenario were assessed against a base-case scenario that assumed the informal transport system’s continued dominance. The demand was estimated using a purpose-built demand model using EMME Version 4.3.5.44 The majority of projected BRT passengers were previously taking existing bus, minibus, and coach services. Fare was assumed to be distance-based, ranging from PKR 15 to 55, and averaging PKR 35. The direct benefits of the proposed BRT system include significantly reduced travel time for Karachi’s transit passengers, lower operating cost for the city’s public transit services, and reduced travel time and fuel consumption for users of other transport modes due to the decongestion of the road network. Indirect benefits include the reduction of costs related to GHG and other toxic air emissions and reduced death and injury from crashes. Based on ADB’s Guidelines,45 the project’s economic viability was assessed by examining the project’s economic internal rate of return (EIRR) and net present value with a discount rate of 9%. The assessment assumed a 2-year project implementation period starting in 2019, and a 20-year economic life thereafter (2021–2041). The cost information used in the analysis was based on 2018 constant prices. The analysis was conducted based on the domestic price numeraire. The project EIRR was found to be 20% if all benefits are included, and 16% without safety and environmental benefits; well above the 9% minimum EIRR required for an ADB-financed project. The analysis included sensitivity tests to ensure a robust result. These tests considered (i) a 20% capital cost overrun; (ii) a 20% reduction in passenger ridership; and (iii) a 2-year delay in system opening. None of the tests brought the project below the 9% minimum EIRR. 97% of passengers come from the current bus system. Differentiation between buses made is based on the bus routes operating in the project area. Only 1% are estimated from motorcycles, passenger cars and rickshaw. Value of time costings assumed are the same for rickshaw, motorcycle and any bus user (see VOT Financial Model File 17). Car users have higher value of time. VOC is basically lower for rickshaw and motorcycle than bus. Lower values of mode switching will have a marginal impact on the economic analysis due to small differences of VOT and VOC and low base values of 1% mode switch assumed. Increased mode switch would increase the EIRR if more passengers switch from cars and slightly decrease the EIRR if more passengers switch from motorcycles and rickshaws. Financial Analysis46 The financial analysis of the project was carried out in accordance with ADB’s Financial Management and Analysis of Projects.47 The project and its operational plan have been designed to ensure that the revenue generated from the BRT system will adequately cover its O&M costs. The ADB loan will cover the civil works, consultants, the bus industry transition program and equipment, including (i) the purchase of all vehicles for the initial fleet, with an expected 12-year lifespan; and (ii) a biogas plan to produce local CNG from cattle waste. TransKarachi, the managing company, is not responsible for repaying the capital cost of the loan. The Government of Sindh decided to consider the capital cost (including that of the BRT infrastructure and initial fleet) a grant and does not intend to recover this investment from the system’s operational revenues. The government intends to ensure the system’s financial sustainability and to limit or even eliminate the need for operational subsidies troubling other existing BRT systems in Pakistan, such as in Lahore, Islamabad-Rawalpindi or Multan. In the absence of a cost recovery tariff, a conventional financial evaluation based on cash flow analysis leading to the computation of a FIRR is not considered appropriate.

43See for further details File 7 44ADB, 2018, Karachi BRT Project: Demand Modelling Report. Logit: Miami 45ADB, 2017, Guidelines for the Economic Analysis of Projects. Manila. 46See for further details File 7 47 ADB, 2005, Guidelines for the Financial Management and Analysis of Projects. Manila.

APPRAISAL SUMMARY


F The BRT system generates revenue in three ways: fares, advertising, rent on concessions and storefronts in stations and depots. In 2021, fare revenue, the largest source, is estimated to raise 23 MUSD a year, using a distance-based fare that averages $0.3 (PKR 35) per trip.48 Advertising revenue is estimated to raise 3.2MUSD a year, or 10% of total revenue, while revenue from concessions is estimated at 5.2 MUSD, based on the current market price of equivalent commercial real estate per square meter. This revenue will be used to cover all O&M expenses, as well as the procurement of new buses to keep up with projected demand increases and fleet replacement costs. A financial clearinghouse company will collect and distribute fare revenue. Vehicle operation fees will be paid on a per km basis. Station services, including cleaning, security, and staffing, will also be contracted out. GCF Financed Components

Biogas Facility

The biogas facility can be operated profitably recovering its investments from the sale of biomethane to the transport operators. The facility will be publicly owned albeit potentially run on a contract base through a private company. The cattle waste becomes the property of the Sindh Solid Waste Management Board after leaving the cattle yard. Initial informal discussions with the Sindh Solid Waste Board indicate willingness to allow use of the waste in return for carrying out general sanitation in the immediate area. Land is available at the north eastern side of the colony. Initial discussions with the Cattle Yard Owners Association has indicated support subject to the provision of reliable power for the operations of the members. This can be done based on power generation with biogas at the plant. The organizational complexity of mounting the plant and arranging solid contracts with the different stakeholders is considerable and prevents private companies from entering this field. The project is willing to take on this task if supported financially through a concessional loan from the GCF thereby reducing the financial investment risk49.

Biomethane Hybrid Buses

Various bus technology options were assessed for the BRT Karachi including diesel, CNG, hybrids (diesel and CNG), electric and biomethane-hybrid buses. Financial data calculated is:

• Capital Expenditure (CAPEX); for BEBs also CAPEX infrastructure is included; this is not realized with fossil fuel options as the fuel station price is taken. For BEBs a 16 years lifetime is assumed compared to fossil buses of 12 years based on minor vibrations and stress on the bus (with battery replacement after 8 years); For charging infrastructure a lifetime of 20 years is assumed.

• OPEX including maintenance (bus plus charging infrastructure) and energy cost; for fossil fuel an annual real price increase is included in calculations;

• Total Cost of Ownership (TCO) is determined based on discounted values for a 12-year period; The financial TCO includes market values and the economic TCO includes the economic value of avoided emissions.

An assessment of the economic value of the reduced emissions is made by assigning a monetary value to emissions of PM2.5, NOx, and CO2 based on data for Pakistan50. The following table compares core parameters of buses per technology based on the bus fleet composition (9m, 12m, 18m) and the respective mileage for this project.

Table 4: Financial and Economic Parameters of Different Buses

Parameter Unit Diesel CNG Diesel

hybrids CNG

hybrids BEBs Biomethane

Hybrid CAPEX fleet investment MUSD 31 44 39 53 75 53 Financial TCO for fleet USD/km 0.53 0.57 0.54 0.59 0.68 0.59

48The current average fare in the existing informal public transport system is PKR20. Only a slight increase is

proposed for the BRT system, while providing a much better transportation experience for a still-affordable fare. 49For more information See File 10 FSR Report Biogas Plant 50IMF (2014), Getting Prices Right

APPRAISAL SUMMARY


F Economic TCO for fleet USD/km 0.60 0.62 0.59 0.64 0.71 0.59

Biomethane hybrid buses have the best economic TCO i.e. this is economically seen the most profitable option with the highest benefits for society overall. Financially however they are not profitable due to having a higher financial TCO then baseline diesel buses.

The differential risk-related TCO is determined in 2 steps.

Step 1: Differential TCO based on standard financial model for project bus fleet

Baseline Diesel

Buses Project Biomethane

Hybrids Differential

TCO TCO buses in MUSD (entire fleet, cumulative 12 years) 84.4 94.1 9.7

Note: based on project bus fleet of 9/12/18m buses with their average annual mileage per bus size and a 12-year lifespan; 10% discount factor; details see File 6 Step 2: Risk adjustment Energy savings of hybrids of 20% are based on average numbers of fleets worldwide. The following table shows actual monitored savings per city using Natural Gas (NG) hybrids. Data show a large variation indicating a risk that hybrids save less energy than projected. This can be true in the case of Karachi due to higher ambient temperatures (less savings of hybrids) or higher average speeds (less stop and go traffic resulting in less energy savings). The risk adjustment is based on savings as registered in the lower 20 percentile of cities using NG hybrids.

Type rate LNG hybrid Tengzhou 4% LNG hybrid Jinan 6% CNG hybrid Jinan 16% CNG hybrid Hengyan 17% LNG hybrids Baoding 19% LNG hybrids Guangzhou 20% CNG and LNG hybrids Linyi 29% CNG hybrids Xiangtan 30% Median NG 18% lower 20 percentile NG 10%

Source: Grutter Consulting based on ADB contract; all data based on fleets of hybrids and conventional buses same city; minimum fleet size hybrid 100 units; data records over 12 months of 2016

Baseline Project Differential TCO TCO risk adjusted in MUSD 84.4 113.2 28.8

The risk factor is thus 28.8 MUSD – 9.7 MUSD = 19.1 MUSD. The risk factor is the difference between the TCO excluding risk and the TCO with risk. The risk factor is dependent on the actual performance of the buses and is thus a probability but not a certainty. The probability of occurrence is estimated at medium level based on the differences of performance of various cities.

Concessionary loan finance is requested for the TCO adjusted risk with a total of 27 MUSD. The remaining CAPEX is financed through ADB.

Adaptation Costs

APPRAISAL SUMMARY


F Impacts of flood proofing are extreme precipitation events which can overload the drainage systems along the BRT route causing inundation, damage to roads and underground tunnels, due to flooding. The CRVA (File 2) assessed intense precipitation as climate stressor with impacts on the drainage and flood control infrastructure incl. increased urban levels flooding and increased frequency, area, depth and duration of flooding. No financial impact of the potential impacts of flooding were realized but they would include next to damage of infrastructure also service interruption costs. The study recommends as one of the adaptation measures the use of lane strips which not only reduces busway requirements but also noise levels and sealing of urban surfaces. Drainage systems with increased capacity are also required.

The adaptation investments are related basically to improved drainage and road construction changes (instead of asphalt roads lane strips). The incremental cost for road construction is 0.5 MUSD per km amounting to 10.2 MUSD for the 18.9 km of the BRT (see Files 12 and 13). For drainage the system design from the start included provision for high levels of flooding as also identified in the CRVA study i.e. no alternative investment plan which is not climate-proof was realized and therefore incremental costs of adaptation investment for drainage are not detailed. Based on this, GCF grant finance of 7 MUSD is requested for the partial coverage of the incremental cost of the lane strips.

Other Components

GCF grant finance for other components includes bike sharing and last-mile vehicle connectivity with e-pedicabs, incremental costs for adaptation measures for BRT infrastructure and the monitoring andreporting component.

The following table summarizes the GCF financed components.

Table 6: GCF Finance Summarized (MUSD) Component Grant Concessional Loan Biogas plant 0 10.2 Biomethane hybrid buses 0 27.0 NMT 3.8 0 Adaptation 7.0 0 GHG monitoring 1.0 Total 11.8 37.2

Concessionality for all components is based on incremental financial costs not recovered (grant) and incremental capital expenditure (loan). For further details on bus see report File 3 and excel spreadsheet in File 6.

APPRAISAL SUMMARY


F F.2. Technical Evaluation

BRT System

The project is a third-generation BRT system using a “direct service” operational model allowing BRT vehicles to travel along the BRT corridor in the busiest parts of the city and off-corridor in less congested areas. This approach expands the system’s reach and capacity, lessens passenger transfers, and increases ridership and financial sustainability. The project was designed primarily to limit operational subsidies and create additional sources of revenue through commercial activities. The project has innovative design features such as (a) the promotion of NMT through universal accessibility, the inclusion of bicycle lanes along the BRT corridor, and a bicycle sharing system; (b) a modern fare collection system using smart cards to enable distance-based fares; (c) a waste-to-fuel scheme to produce biomethane from cattle waste and fuel the BRT fleet composed of biomethane hybrid buses; (d) heritage preservation through the improvement of historical buildings and pedestrianization along a 2-km section of the common BRT corridor and (e) last-mile connectivity with e-pedicabs. The project design includes a fleet scrapping program and compensation mechanism for nonparticipating operators. A large stakeholder engagement and participation plan is also being implemented to ensure buy-in from the impacted communities.

The 28-km main corridor will be restructured over its entire width (“façade-to-façade”), including (i) the BRT infrastructure comprising 25 stations and dedicated lanes built at-grade in the median; (ii) the mixed-traffic roadway comprising up to six lanes in each direction in wider sections; (iii) the non-motorized transport infrastructure comprising bicycle lanes and improved sidewalks along the corridor; and (iv) on-street parking and green areas added in various locations. The 2-km section of the common corridor, including 3 stations, will also be restructured to create a mall for pedestrians and BRT only, with an uplifting of historical buildings’ facades. The BRT infrastructure will be completed with two depots, one underground staging facility, and off-corridor bus stops.

Various engineering design works financed under ADB’s PDA loan have confirmed the project’s technical viability. The 28-km BRT corridor alignment was carefully selected to capture major demand hubs while verifying the possibility of retrofitting the BRT infrastructure (stations and dedicated lanes) in congested areas and narrower corridor sections. The BRT remains at grade for 95% of its length, allowing 100-km off-corridor service routes to enter the dedicated infrastructure. Only 3 underpasses for BRT and one elevated station are planned to allow full segregation and maximum commercial speed at critical junctions. The mixed-traffic roadway comprises up to six lanes (including service roads) in each direction in wider sections, as well as various grade-separated structures. A climate risk vulnerability assessment led to a reassessment of the drainage capacity requirement to climate-proof the BRT corridor from floods.

The BRT system was planned using a detailed methodology, including the inventory and analysis of existing services to determine current service capacity and existing demand, and a purpose-built demand model. Based on these results, an optimized routing and network plan was developed to ensure maximum ridership and the financial sustainability of the system, including the lowest possible operational subsidies. The institutional structure has been improved by the establishment of the SMTA and TransKarachi, which will manage and control the overall quality of the BRT system’s operations. The system’s quality will be enhanced by maximizing the use of private sector contracts for system operations. TransKarachi will specifically oversee private sector contracts to companies for (i) bus operations; (ii) system control, encompassing fare system, station services, and bicycle sharing system; (iii) the financial clearinghouse; and (iv) commercial services such as property management and advertising.

The BRT fleet will consist of 19 pm buses, 134 12m buses and 46 18m articulated units (includes 8% reserve fleet). All buses have low-level entry and are equipped with AC and ITS equipment.

See for a further description Files 8a to 8c.

APPRAISAL SUMMARY


F Biogas

Biogas can be produced based on a microbiological process from different kinds of biomass. Possible feedstocks can be wastewater, wastewater treatment sludge, manure from animal production, industrial and municipal organic waste, landfill gas or energy crops as well as mixtures. The technology for biogas production as well as for biogas purification and upgrading is reliable and mature. For biogas purification and upgrading, a variation of technologies is available, generally in standardized, prefabricated modules. The biogas plant would include a 250,000 m3 CIGAR system made from HDPE. The top of the CIGAR would be elevated 5m above the ground level with a depth of 10.5m. Cattle dung collection would be carried out using existing canals. Civil works to protect against flooding would be carried out adjacent to the CIGAR. Solids from the process would be sold as fertilizer after heat treating using heat from the 1.5 MW Biogas engine providing power to the facility. A sludge management plan will be made as part of the final design including sludge management, a mass balance, demand and supply management of the sludge, and treatment of sludge if it cannot be sold. Effluent from the CIGAR would be primarily treated and provided to the cattle yards as wash water. A connection will be required to the Sui gas grid. It has been assumed that gas will be injected into the Sui gas grid after it has been upgraded after the CIGAR from 60% methane content to 89% methane content. Gas will be transported through the Sui gas grid to an offtake point near the BRT Red Line depot. Compression and Bio-methane dispensers will be powered by a 500 kW NG engine using biogas. These assets will be contained within the depot building51.

Bus Technology

A technology assessment of the environmental, financial and economic impact of using different bus technologies for the BRT Karachi was made52. Bus technologies assessed include (i) diesel buses; (ii) diesel hybrid buses; (iii) CNG buses; (v) CNG hybrid buses; (vi) Biomethane hybrid buses and (vii) Battery-electric buses (BEBs);

CNG buses became popular in many cities basically due to having lower emissions than diesel buses (prior Euro VI). CNG is widely used in Pakistan. CNG buses have a slightly higher weight compared to diesel units due to gas tanks (0.5-1 ton relative to the bus size) which can lead to a slightly smaller passenger capacity - however, it is not significant and depends more on the manufacturer of the bus. Operating ranges are slightly lower than of diesel buses but can be adapted to the requirements of the operator and are therefore not considered a limitation of the bus. CNG buses recommended for Pakistan are Euro V emissions standard based on the gas specifications. Most manufacturers worldwide can comply without problems with this standard (standard e.g. also in force currently in PR China). Large hybrid bus fleets are operating since multiple years in many Chinese cities, in London, in Bogota and in New York. Many other cities worldwide have smaller fleets of hybrid buses. Multiple cities in PR China are operating diesel, CNG, LNG as well as LPG hybrids since many years with most units being 10-12m buses. However also 8m, 14m and 18m hybrids are ploughing the streets. Hybrid buses are available in virtually all sizes (except 26m bus) and with all fuel combinations – NG hybrids are used in many Chinese cities in large numbers since more than 5 years. Fuel efficiency gains in hybrids are basically due to being able to use a smaller than normal conventional internal combustion engine operating at constant periods of maximum efficiency, and usage of regenerative braking (energy lost due to braking is recovered and utilized to charge the battery).

Overall the option of biomethane hybrids is the most appropriate technology for the BRT bus system of Karachi based on following arguments: (i) GHG as well as air pollution impacts are significant; (ii) the total economic costs of biomethane hybrid buses are comparable to conventional diesel buses; (iii) CNG hybrid bus technology is proven and is operated in large fleets with thousands of buses since more than 5 years in numerous Chinese cities. Also, multiple manufacturers exist, and maintenance is straightforward. (iv) Conventional and diesel hybrid buses result in significant air pollution emissions especially concerning PM2.5 and NOx. The available diesel quality does not offer the option of implementing higher Euro standards and an upgrade of diesel fuel quality is not foreseen in the next few years as only recently the refinery has been upgraded to produce diesel with 500ppm sulfur contents; (v) Electric

51For details see File 10 52See File 3 for the report and File 6 for excel sheet calculations

APPRAISAL SUMMARY


F buses offer substantial environmental benefits. However, the financial and economic cost is significantly higher than using other bus technologies. Also, GHG abatement costs are high. Additionally, BEB usage for 18m buses is very uncommon and requires intermediate fast charging or opportunity charging putting stress on the fragile electric grid (supply shortages of electricity, very frequent blackouts) in the city and making this option technically complex and risky in its implementation.

F.3. Environmental, Social Assessment, including Gender Considerations

Environmental

The environmental impact assessment (EIA) has been prepared in accordance with ADB’s Safeguard Policy Statement. Major anticipated negative environmental impacts of the project during construction are related to traffic disruptions and access to properties, relocation of utilities, cutting trees, noise and air quality impacts, as well as community health and safety. During operation, it is anticipated that the project will have mostly positive impacts—specifically, on urban air quality and acoustic environment. Adequate mitigation measures are incorporated into project design and will be implemented through an environmental management plan, which includes a capacity building and training program for TransKarachi project staff, and contractors during pre-construction and construction stages. The project complies with public disclosure and consultation requirements. Public consultations with various stakeholders were conducted from December 2017 to May 2018. In addition, public hearings will be organized in August 2018. The draft EIA was disclosed on ADB website on 30 May 2018, and the final EIA will be disclosed by the end of August 201853.

Social

The project will not involve acquisition of any private land. However, it will displace 795 owners and workers from micro businesses occupying the existing right-of-way and minor parts of privately owned permanent, commercial structures which impinge the existing right-of-way. Affected structures include 263 semi-permanent structures, and 86 permanent secondary structures from commercial establishments. Around 493 micro business will need to relocate to temporary alternative locations during construction and to permanent formal vending spaces that will be included in the project design. A draft resettlement plan has been prepared in consultation with the affected persons and relevant agencies. This will be updated following the approval of the detailed design. The SMTA will be responsible for updating and implementing the resettlement plan, with support from the resettlement team54. The project is located in the city of Karachi, where no indigenous peoples, as defined under ADB’s Safeguard Policy Statement, reside. The project will not affect any indigenous communities and, accordingly, no indigenous peoples planning documents are required. The project will benefit Karachi’s estimated population of 14.9 million, 75% of whom are poor or low income, through increased access to safe, reliable, and affordable public transport. An estimated 1.5 million passengers are predicted to use the BRT regularly, with the percent of female passengers reaching 15% in the first year of operation and increased to 20% in the last year of project implementation (2022). Overall, the project is expected to generate 2,130 jobs directly through future BRT operations, including 1,424 jobs for station services (such as ticketing, security, and cleaning), 615 jobs in bus operations (such as driving, conducting, and mechanics), and 81 TransKarachi staff.55 The affordability of the services is analysed closely, as low-income users are a principal target group for the project. Affordability is investigated through an analysis of the existing fare levels since the existing ridership emanates from

53See draft EIA in File 9 54See for further details File 4 55See for further details File 4 (Summary Poverty Reduction and Social Strategy and Gender Action Plan)

APPRAISAL SUMMARY


F lower-income groups. The new fare schedule will largely follow from the existing levels. The fare acceptability particularly for women is assessed during the focus group discussions with stakeholders.

Gender

The low percent of female passengers in public transport is mainly due to the risk of harassment that women face in overcrowded public buses. Consequently, most women prefer to walk 2-km per day on average, or are forced to use more expensive private transportation, impacting their disposable income. The project will establish universal access and safety features for women, children, and the disabled in all 28 BRT stations and their accesses, including proper lighting and monitoring through closed-circuit television cameras; and in buses, including segregated areas for women, and staff trained to deal with harassment incidents. Categorized as effective gender mainstreaming, the project will encourage women’s meaningful participation by ensuring that 10% of BRT operations employees and TransKarachi staff are women56. The time schedules (i.e. hours of service and frequency) of the BRT are designed to be improved from existing conditions. Existing off-peak services are ill-suited for women due to the infrequency of those services. The BRT services provide a minimum of a vehicle every 15 minutes, even during off-peak period. Again, this issue is part of the focus group discussions with women during the stakeholder engagement process. TransKarachi will engage one full-time social and gender specialist as staff, while SMTA will engage a social development specialist (incl. gender). Consultant support (2 gender specialists, of which one is with full-time engagement) for implementation is built-in “SMTA and TransKarachi Capacity Building” consulting package. In addition, TransKarachi will use its OPEX (ADB-financed) to hire an NGO to conduct the proposed gender-specific campaigns / surveys. The TOR for such NGO-supported activities will be drafted by TransKarachi’s gender staff, with consultant support, and shared with ADB for review and approval. The public participation process in the project development includes focussed sessions with women, including non-governmental organizations that represent women’s issues. Focus groups with women are a key feature of the ADB engagement process. A continued process of gender-inclusive consultation and participation of stakeholders will be followed to ensure transparency in implementation and to keep the stakeholders informed and receiving and incorporating their feedback at various stages of project implementation. See paragraphs 46 and 47 of the PAM (File 1) for more detailed information. Also, as indicated in the project’s Summary Poverty Reduction and Social Strategy (SPRSS, File 4): “Consultations with stakeholders were carried out during the project planning and design stage and will continue throughout the project’s life”. In addition, the stakeholder consultation process will be detailed in both the draft Land Acquisition and Resettlement Plan and the EIA.

56For further details see File 5 (Gender Action Plan)

APPRAISAL SUMMARY


F F.4. Financial Management and Procurement

The government, SMTA, and TransKarachi have assured ADB that implementation of the project shall conform to all applicable ADB policies, including those concerning anticorruption measures, anti-money laundering, counter terrorist financing, safeguards, gender, procurement, consulting services, and disbursement as described in detail in the PAM (Project Administration Manual) and loan documents57.The loan proceeds will be disbursed in accordance with ADB’s Loan Disbursement Handbook (2017, as amended from time to time)58, and detailed arrangements agreed upon between the government and ADB. ,

All disbursements under government financing will be carried out in accordance with regulations of the Islamic Republic of Pakistan relevant to co-financing of the projects financed by the Multilateral Financing Organizations. The Government will finance local taxes. Value added tax (VAT) will be claimed by the contractors, suppliers, and consultants in their interim payment certificate (IPC), and TransKarachi will approve the invoices including VAT. TransKarachi will pay the claimed VAT to Sindh Revenue Board. TransKarachi will arrange for payment for the rest of the amount to the contractors, suppliers and consultants. The deducted income tax will be paid by TransKarachi to the Federal Board of Revenue. The deducted income tax will be reflected in the income of contractors, suppliers, and consultants when submitting their finance balance sheets to Sindh Revenue Board.

TransKarachi will maintain, or cause to be maintained, separate books and records by funding source for all expenditures incurred on the project following International Public-Sector Accounting Standard for cash-based accounting. TransKarachi’s PIU will prepare project financial statements in accordance with the government's accounting laws and regulations which are consistent with international accounting principles and practices. TransKarachi will cause the project financial statements to be audited in accordance with International Standards for Supreme Audit Institutions, by an independent auditor acceptable to ADB, such as the Auditor General of Pakistan. The audited project financial statements together with the auditor’s opinion will be presented in the English language to ADB within 6 months from the end of the fiscal year by TransKarachi. Compliance with financial reporting and auditing requirements will be monitored by review missions and during normal program supervision, and followed up regularly with all concerned, including the external auditor. All procurement of goods and works will be undertaken in accordance with ADB’s Procurement Guidelines (2015, as amended from time to time). International competitive bidding procedures will be used for civil works contracts estimated to cost $15 million or more, and supply contracts valued at $2 million or higher. Shopping will be used for contracts for procurement of works and equipment worth less than $0.10 million. An 18-month procurement plan indicating threshold and review procedures, goods, works, and consulting service contract packages and national competitive bidding guidelines is in Section C of the PAM59.All consultants will be recruited according to ADB’s Guidelines on the Use of Consultants (2013, as amended from time to time).

The vehicle operating companies will procure the vehicles through a lease-to-own structure. This model follows the practice as developed in the ADB-financed Peshawar BRT project. This model has several advantages, including the timely and quality provision of the vehicles while at the same time ensuring the operators have a strong incentive towards proper maintenance and operation.

The biogas plant will be based on a Build- Own-Operate-Transfer model in which ownership of the land and plant will revert to TransKarachi at the conclusion of the contract. In turn, a new concession is expected to be awarded to continue the use of biogas for the system.

57See File 1 58The handbook is available electronically from the ADB website (http://www.adb.org/documents/ loan-disbursement-

handbook 59 File 1

APPRAISAL SUMMARY


F Project Organization Structure

Fund Flow Diagram

SMTA does not receive any funding from ADB. SMTA has overall responsibility and oversight but will not have financial or procurement activities. Grants of the GCF will be passed on by reducing the repayment level for specific components e.g. in case of the partial grant funded infrastructure and by lower interest rate costs.

APPRAISAL SUMMARY


F

GCF’s loan in the project will rank pari-passu with co-financier’s loan for “civil works” and “equipment” categories only, which include all components expected to be financed by the GCF (except for the “GHG monitoring and documentation” component, which are consulting services which will be individualized and financed by GCF funds only). GCF funds will be blended with the other co-financiers’ funds and will be disbursed as a % of each claim / withdrawal application submitted for any component under these two categories. ADB will enter into separate loan agreements with the IRP to provide the GCF Loan and the ADB Loan separately.

RISK ASSESSMENT AND MANAGEMENT

GREEN CLIMATE FUND FUNDING PROPOSAL |PAGE 52 OF 64

G

G.2. Risk Factors and Mitigation Measures Please describe financial, technical and operational, social and environmental and other risks that might prevent the project/programme objectives from being achieved. Also describe the proposed risk mitigation measures.

Selected Risk Factor 1

Description Risk category Level of impact Probability of risk occurring

Public transport users do not utilize BRT at projected levels.

Technical and

operational

Medium (5.1-20% of project

value) Low

Mitigation Measure(s)

The PDA consultants estimated demand and ridership with detailed surveys and a sophisticated model. Good design, quality of construction and operations management by TransKarachi will be monitored to ensure that actual ridership at system opening meets the estimate.



Vested interests (existing public transport operators, shopkeepers, and others along the BRT corridor) try to undermine the project during implementation.

Other High (>20% of project value) Low

Mitigation Measure(s) Existing operators. Dedicated cost and consultancy support is built into the project design to facilitate bus industry transition through negotiations and capacity building to operate the BRT system. The industry transition process will also include the green and orange lines, implemented prior to the red line, which will ensure a common approach and minimize potential conflicts that could affect the project’s implementation. Consultations with existing bus operators’ federations were held by consultants to inform operators about the project, and skilled negotiators have been recruited to further discuss and develop a business model to include the existing operators as much as possible in the BRT operations. The initial BRT fleet will be financed under the project and leased to private operators to reduce the need to mobilize capital and allow existing operators to participate in the bidding process. The project design also includes a fleet scrapping program and compensation mechanism for non-participating existing operators.

Shopkeepers’ and traders’ associations. The Province of Sindh, supported by the PMCCB communication team and ADB project team, engaged with traders’ associations and other organizations impacted by the BRT corridor, to

G.1. Risk Assessment Summary

The main risks are related to (i) a lower than expected passenger demand resulting in lower income rates and reduced financial sustainability of the system (ii) vested interests of existing operators and impacted shopkeepers and traders which intent to undermine the project, (iii) delayed operationalization of the project, (iv) a worsening of the security situation affecting BRT implementation and operations, (v) lower than expected performance of biomethane hybrid buses resulting in reduced profitability of operations (vi) vested interests of cattle owners and involved authorities impeding the establishment of the biogas facility.

Mitigation measures to avoid listed risks include monitoring of good design, quality of construction and management by TransKarachi, negotiation with stakeholders and their inclusion in the project or their compensation, capacity building and security provisions. GCF financial involvement is also critical to reduce the potential impact of these risks (e.g. bus performance) thereby allowing the project to go forward with the chosen technology.



G present the project design, consider their concerns, and ensure buy-in and ownership, so that these groups do not oppose the project or ask to change the project design and alignment. Selected Risk Factor 3


Delayed operationalization of the SMTA and TransKarachi fails to provide necessary critical mass to implement the project, and capacity building.

Technical and

operational

Low (<5% of project value) Low

Mitigation Measure(s) SMTA has already been established and is in operation for 2 years, while TransKarachi is being incorporated as a Section 42 (nonprofit) public company. The government, as part of its commitment, has already approved an annual allocation for SMTA’s operations. ADB will finance TransKarachi’s operational expenditures for 3 years. Organograms and job descriptions for key staff for both organizations have been developed by the PMCCB consultant, who will also provide general support during staff recruitment, and build the staff’s capacity. Selected Risk Factor 4


The security situation deteriorates and impairs project implementation and future BRT operations. Other High (>20% of

project value) Low


The Government of Sindh has committed to provide security to the project site through its Home Affairs Department and local law enforcement agencies. Bidders will also be instructed to include provisions for security at the camp site and for transportation. The project design includes measures such as metal detectors installed in all BRT stations, and presence of security agents in all BRT vehicles.



Lower than expected performance of biomethane hybrid buses resulting in reduced profitability of operations.

Technical and

operational

Low (<5% of project value) Medium


Close monitoring of bus performance allows to adapt the technical set-up of the bus to optimize performance. Factors which might result in lower than expected savings of hybrid buses are related to usage of AC as well as driving speed and stop-and-go traffic. Together with the manufacturer optimization of the hybrid systems can be made (e.g. in Bogota hybrid buses could improve their performance more than 5 percentage points after adapting them to city circumstances e.g. changing average revolution of engines or adjusting the battery-hybrid system) and also optimization of the AC system can be made (e.g. temperature control settings; this has been done actively e.g. in various cities of PR China or with sensors within and outside the bus in Zurich). The project includes monitoring of the bus performance. The impact of the risk is also mitigated as financial means are provided by the GCF to compensate the project against this risk.



Vested interests of cattle owners and involved authorities impeding the establishment of the biogas facility.

Other Medium (5.1-20% of project

value) Low



G Mitigation Measure(s)

Risk management is realized through negotiations with stakeholders and getting their buy-in to the project through improving their situation and thus making them also beneficiaries of the biogas plant. Concerning the Sindh Solid Waste Board (official waste owner) they have indicated willingness to allow use of the waste in return for carrying out general sanitation in the immediate area. Initial discussions with the Cattle Yard Owners Association has indicated support subject to the provision of reliable power for the operations of the members. Both elements have been incorporated into the biogas plant to reduce risks of resistance against the plant. Other Potential Risks in the Horizon There is a risk induced by the necessity to undertake a 27 km BRT infrastructure construction in densely populated and congested area. Traffic congestion will be more exacerbated during the construction. Thus, it may worsen road users’ frustration and lead to an opposition to the project. This risk will be mitigated by carefully planning the infrastructure construction, by hiring qualified contractors and supervision firms, and by undertaking an appropriate information campaign to the general public and the road users. Accident risk also exists. It will be mitigated through the road safety component and the safeguards requirements.

RESULTS MONITORING AND REPORTING


H H.1. Logic Framework. Please specify the logic framework in accordance with the GCF’s Performance Measurement Framework under the Results Management Framework.

H.1.1. Paradigm Shift Objectives and Impacts at the Fund level

Paradigm shift objectives

Shift to low-emission sustainable development

pathways

The project contributes towards a shift towards low-emission urban transport through the establishment of a state-of-the art BRT system combined with two novel approaches which significantly increase the long-term transformational shift: 0-emission BRT buses based on biomethane-hybrid units produced with locally sourced biogas and the implementation of NMT facilities including cycle-ways and last-mile NMT vehicles. The direct impact of the project is estimated at 2.6 MtCO2e avoided

Expected Result Indicator Means of

Verification (MoV)

Baseline Target

Assumptions Mid-term Final

Fund-level impacts Core Indicator

Cost per tCO2e decreased for Fund-funded mitigation projects/ programmes60

GHG report of project based on sum of mitigation actions with their specific monitoring reports (biogas, NMT, e-pedicab, BRT) plus GCF funds received

19 USD/tCO2e

19 USD/tCO2e

No delays in implementation which result in lower GHG abatement

M2.0 Reduced emissions through increased access to low-emission transportation

M2.1. tCO2e reduced61

Project report based on annual data (see section H2 for details) based on surveys62 and measurements63

0 58,000 tCO2e

60,000 tCO2e

No delays in implementation which result in lower GHG abatement

60 Calculated based on GCF investment/projected lifetime GHG reductions 61TTW calculations based on UNFCCC CDM methodology for BRTs (ACM0016) for BRT component; AMSIIIH for biogas plant and NMT specific methodology for NMT and e-pedicabs; see section H2 for details 62BRT passenger surveys to determine baseline mode trip and emissions; e-pedicab, NMT and bike sharing user surveys to determine trips and modes used in absence of the project; surveys realized by 3rd parties 63Fuel consumption of buses is measured as well as core parameters of the biogas plant (biogas production, internal usage, electricity production; net insertion in pipeline; flare usage)

http://www.gcfund.org/fileadmin/00_customer/documents/Operations/5.3_Initial_PMF.pdf

http://www.gcfund.org/fileadmin/00_customer/documents/Operations/5.2_RMF.pdf



H

64Indicator measured per annum, daily ridership multiplied by an annum factor, with the gender attribution proportionally maintained against the ridership 65Refers to fuel economy of BRT buses due to usage of hybrid system in comparison with equivalent conventional non-hybrid buses; Baseline buses are a different size and operate with different traffic and route conditions and are thus not the comparison base. 66Fuel savings is used as indicator as the savings ratio is relevant and related to the technology and not the absolute level of fuel consumption which is related also to external factors such as climate (relevant for AC and thus fuel usage), speed, traffic conditions 67No conventional non-hybrid buses of the same characteristics operate in Karachi on comparable routes (same speed, traffic conditions); methodologically therefore fuel savings are compared by running BRT buses with and without the hybrid component or by monitoring the regenerative energy captured. 6820% of savings of hybrid BRT buses compared to BRT buses without hybrid system operating i.e. 20% fuel savings due to hybrid bus system

H.1.2. Outcomes, Outputs, Activities and Inputs at Project/Programme level

Expected Result Indicator Means of

Verification (MoV)

Baseline Target

Assumptions Mid-term Final

Project/programme outcomes

Outcomes that contribute to Fund-level impacts

M8.0 Increased use of low-carbon transport

M8.1. Number of additional female and male passengers using low-carbon transport as a result of Fund support64

Project report based on smart-card system plus survey for gender distribution

0

<10% women on traditional

system

Total 143M

ridership 121.55M male and 21.45M females (15%)

Total 146M

ridership116.8M

male and 29.2M

females (20%)

Current system is not low-carbon so all BRT users are considered additional low-carbon passengers

M8.2 Vehicle fuel economy65 and energy source as a result of Fund support66

Fuel economy: Vehicle sample measurements of BRT buses67

Energy source: project report based on fuel invoices

Fuel economy:

n.a.

Energy source:

60% CNG and 40%

diesel

Fuel economy:

20% savings68

Energy source:

100% bio-methane

Fuel economy:

20% savings

Energy source: 100% bio-

methane

Expected values (independent of year) of fuel consumptions of BRT buses are 19kg/100km for 9m units, 27kg/100km for 12m units and 37kg/100km for 18m units



H Project/ Programme Outputs

Outputs that contribute to Outcomes

Expected Result Indicator Means of Verification (MoV)

Baseline Targets Assumptions Mid-Term Final

1. Procurement and construction of BRT and complementing core infrastructure completed

1.1 Number of KM of BRT Corridor constructed and climate proofed

TransKarachi reports based on physical evidence, construction contracts, commercial space contracts and construction reports

0 km 28 km to be rebuilt

30 km Total: 28 km mixed traffic lanes rebuilt; 2 km upgraded 19 km (of total) with strip lanes (climate proofing) 28 km bike lanes

30 km Total: 28 km mixed traffic lanes rebuilt; 2 km upgraded 19 km (of total) with strip lanes (climate proofing) 28 km bike lanes

No unexpected deterioration in security situation which delays project implementation

1.2 Number of BRT stations and depots constructed

0 stations 0 bus stops 0 depots 0 staging facility

25 universally accessible stations applying gender-inclusive design on BRT corridor 150 bus stops over 110 km off-corridor BRT routes 2 Depots 1 Staging Facility

25 universally accessible stations applying gender-inclusive design on BRT corridor 150 bus stops over 110 km off-corridor BRT routes 2 Depots 1 Staging Facility

1.3 Proportion of women-led business with occupancy in BRT upgraded permanent formal vending spaces

New commercial areas; baseline are not permanent, formal places

Women-led MSMEs secure 10% of permanent formal vending spaces available

Women-led MSMEs secure 10% of permanent formal vending spaces available

2. Environment friendly green BRT system in Karachi operationalized

2.1 Mode of transport BRT passengers would have used in absence of the project (as %)69

Year 1 bi-annual survey; year 2 annual survey70

n.a. (no BRT)

1% motorcycle 1% passenger car 1% rickshaw 51% traditional minibus 16% traditional coach 30% traditional large bus

1% motorcycle 1% passenger car 1% rickshaw 51% traditional minibus 16% traditional coach 30% tradititional large bus

BRT system is sufficiently attractive for clients to change transport modes

69If various modes would have been used by a passenger the mode with the longest trip distance is taken; refers to modes used in absence of the BRT for the passengers using the project; this is not the mode share of transport in Karachi but reflects the mode shift due to the BRT in Karachi; the term “traditional” refers to baseline bus modes of public transport 70In accordance with ACM0016; the bi-annual survey in year 1 is basically to check seasonality.



H 2.2 Number of low-carbon BRT buses/fleet procured

TransKarachi reports; Assets Register; Procurement contracts

0

199 Buses Total 9 M Buses – 19 12 M Buses – 134 18 M Buses – 46

199 Buses Total 9 M Buses – 19 12 M Buses – 134 18 M Buses – 46

No procurement delays

2.3 Volume of NMT modality use (per annum)

TransKarachi reports; Assets Register; Procurement contracts; survey of users of NMT facilities realized annually by 3rd party

0

Bike-sharing: 300 bikes, 150 e-bikes and 50 cargo bikes used at 90% operational functionality for 730,000 rides E-pedicabs: 250 conventional and 50 universally accessible pedicabs used at 90% operational functionality for 490,000 trips

Bike-sharing: 300 bikes, 150 e-bikes and 50 cargo bikes used at 90% operational functionality for 910,000 rides E-pedicabs: 250 conventional and 50 universally accessible pedicabs used at 90% operational functionality for 580,000 trips

No procurement delays; Bikes and e-pedicabs procured are sufficient to meet NMT and last-mile connectivity needs to attract people to BRT use

2.4 Reduced amount of air pollutants (PM2.5, NOx, SO2)

Project report based on annual data based on surveys and measurements71

0 (reductions and not absolute levels)

485 tNOx 4 tPM2.5 6 tSO2

498 tNOx 4 tPM2.5 7 tSO2

No implementation delay

2.5 Net tons of biogas produced per annum (total and for BRT use)

Biogas operator reports based on monitoring equipment in biogas plant and gas dispenser flow meters to BRT fleet

0 4,000 tons total/ 3,700 tons for BRT use

4,100 tons total/ 3,800 tons for BRT use

No delays in legal contracts and procurement of plant

71Calculation based on emissions per pkm of BRT and alternative modes; mode share determined by survey (same approach as for GHG calculation); the same approach as used for the ex-ante emission estimates is used (see File 6 sheet “BRT ER” for projections and File 3 for methodology)



H 3. BRT project is compliant with Environmental and Social Management requirements, and implements an effective bus industry restructuring mitigation action plan

3.1 Level of implementation to the requirements of project specific Environmental Management Plan (EMP) & Resettlement Plan (RP)72

Reviews of EMP and RP; volume of redress mechanism complaints

EMP Level = 0 Resettlement Plan Level = 0

EMP: Level 4 RP: Level 4

EMP: Level 4 RP: Level 4

Change of leadership in the GoS could delay approvals; offer for integration is sufficiently attractive relative to compensation offer

3.2 Number of informal private operators converted to public BRT service contractors

TransKarachi Service Provider Contracts

0 % (no BRT) 50% 50%

4. Effective management by TransKarachi and SMTA of BRT in-service

4.1 Degree of fit for purpose capacity and staffing for TransKarachi and SMTA73

Institutional capacity scorecard ranked annually (addresses staffing & gender proportions; capacities provided by trainings; service quality of staff); Reports on safety / accidents on BRT routes; passenger satisfaction surveys realized annually incl. gender specific aspects

TBD based on the composition of the institutional scorecard



Availability of qualified women staff willing to work at SMTA and/or TransKarachi

4.2 Level of use of BRT Karachi GHG performance monitoring reports for subsequent phases of Pakistan BRT lines74

Annual M&E performance reports of TransKarachi; interviews with other BRT proponents

0 Level 1 Level 2 Solutions are technically and financially feasible for other BRTs

72In this context, the “level” of implementation is expressed along a scale of 1 to 4 with the scale referring to a particular level. Definitions of the levels will be defined and finalized by the inception workshop. Initial proposal reflects: Level 0 = Plans drafted; Level 1 = Plans adopted with list of mitigation actions in response to specific contexts; Level 2 = Actions from plan are taken and on-going monitoring of situation; Level 3 = Effectiveness of mechanisms (e.g. the volume of redress complaints addressed in a timely manner etc. compensation mechanism etc.); Level 4 = Assessment that mitigation efforts have addressed the issues appropriately. 73The scorecard and the baseline will be established in year 1 of implementation 74In this context, the “level” of use is expressed along a scale of 0 to 3 with the scale referring to a particular level. Definitions of the levels will be defined and finalized by the inception workshop. Initial proposal reflects: Level 0 = data/evidence from GHG reports not available; Level 1 = data/evidence from GHG reports



H 4.3 Number of BRT performance reports made publically available

TransKarachi and/or SMTA Reports and Website

0 0 6 publicly available reports75

applied in economic analyses made available to decision-makers; Level 2 = data/evidence from GHG reports influences public sector decision-makers (remaining BRT lines in Karachi or other BRT systems under development in Pakistan or elsewhere globally); Level 3 = data/evidence from GHG reports provides proof of concept to incentivize consideration and/or engagement for private sector investment 75Reports on Non-Motorized Transport, E-Pedicabs; Biomethane Hybrid Buses, Biogas Facility, BRT and report on socioeconomic and perception survey of BRT



H

Activities Description Inputs Description

Activities related to Project Output 1

a) Utility relocation, b) Construction of main BRT corridor, c) Construction of common corridors, d) Implement off corridor

improvements; and e) Construction of depots and staging

facility

Financial resources, staff and technical resources

a). Financial resources available: 296.7 MUSD

b). Goods and works contracts based on international competitive bidding in 3 lots

c). Project management and construction supervision based on SSS/QCBS (Single Source Selection/Quality- and Cost-Based Selection)


a) Procure BRT bus fleet b) Install bike sharing and NMT last-

mile connectivity vehicles (e-pedicabs)

c) Procurement and installation of a distance-based fare collection system, BRT control center, and other Intelligent Transport System components

d) Construction of biogas facility .


a). Financial resources available: 93.1 MUSD plus 1 MUSD from operational expenditures of TransKarachi

b). Goods and works contracts based on

- Design, supply, install and O&M of biogas plant based on international competitive bidding

- rolling stock contract based on international competitive bidding

- contract for BRT System Control Goods and Services including “Design, Installation, Testing, Commissioning, and Maintenance of Intelligent Transportation System (ITS), Fare System, Station Management, and Bicycle Sharing System Equipment (Hardware & Software) and Operational Services based on international competitive bidding - Vehicles, Office Equipment and Furniture under TransKarachi Operational Expenditures with multiple procurement methods


a) Establishment and implementation of EMP and RSP

b) Implementation of bus industry restructuring program



b). Project management contract based on SSS/QCBS (Single Source Selection/Quality- and Cost-Based Selection)


a) Generate conceptual design for expansion of green BRT principles for BRT Karachi Blue and Yellow lines

b) Administration of TransKarachi and SMTA

c) Pay costs of finance during implementation

d) Implement the capacity development strategy for TransKarachi and SMTA

e) Implement project performance and GHG monitoring and evaluation system (including surveys, reporting and evaluation activities)



b). GHG monitoring contract based on SSS/QCBS (Single Source Selection/Quality- and Cost-Based Selection)

c). Conceptual design of blue and yellow lines contract based on SSS/QCBS

d). SMTA and TransKarachi capacity building contract based on SSS/QCBS

e). Project management contract based on SSS/QCBS

f). monitoring equipment purchased based on “shopping for works”



H H.2. Arrangements for Monitoring, Reporting and Evaluation TransKarachi and SMTA (EE) will develop, implement, and operate the GHG M&E system. They are also in charge of collecting, aggregating, and disseminating the results indicators of the project. The EE will provide ADB project reporting prior to the scheduling of reports to be delivered to the GCF, which as AE ADB will aggregate and report to the GCF through Annual Progress Reports (APRs). After the loan is declared effective, ADB will field an inception mission to discuss the PAM in detail, orient the PMU and PIU on its roles and responsibilities, discuss implementation arrangements, procurement processes, disbursement arrangements, audit, and reporting requirements for the project. ADB will field review missions during the duration of project implementation to review the project progress and address issues, if needed, to ensure that the project is completed as planned. An independent midterm evaluation will be conducted by ADB between the first and second year of implementation to assess whether attainment of the project’s immediate objective (design and monitoring framework) is still likely to be achieved and if changes in project may be needed. An independent final evaluation will be conducted by ADB. Within 6 months of physical completion of the project, TransKarachi will submit the government’s project completion report to ADB and ADB will finalize the GCF project completion report. For GHG monitoring and reporting TransKarachi will be supported by a specialized unit including specialized international support to monitor and report results. This unit will report annually amongst other the following aspects: a). Performance of the BRT system including GHG reduction, and mode shift. The monitoring approach will follow basically the CDM approved methodology for Mass Transit Systems ACM0016 which requires as main monitoring parameters passenger numbers, fuel consumption of BRT buses and passenger surveys to determine the passenger origin-trip mode structure and distances and the baseline mode structure used in absence of the BRT. Passenger surveys for the BRT follow the methodology of ACM0016 and are realized by an independent 3rd party with experience in surveys. Survey design and statistical assessment of surveys performed will be done by the international consulting form contracted by ADB for this sub-component. b). Performance of the biomethane hybrid buses to determine the energy usage per km, the energy savings due to the hybrid system and the GHG emissions per bus-km. This requires measurement via on-board-computer of relevant engine parameters to model hybrid energy savings and/or temporary hybrid system disconnections to establish comparison baseline values. Data collected of daily fuel consumption of buses will also allow to optimize the bus performance. c). NMT usage including cycle lane users, bike-sharing users and e-pedicab users. This includes monitoring of the parameters number of users plus through survey or geo-tracking of distance driven per user and alternative mode used in absence of the facilities. A user survey for e-pedicabs and for NMT will be made to determine the motivation of usage, the complete trip structure and the baseline mode used in absence of the offered facility. User surveys are realized by a 3rd party with experience in realizing surveys. Survey design and statistical assessment of surveys performed will be done by the international consulting form contracted by ADB for this sub-component. This allows to determine ex-post the GHG impact of these measures. d). Biogas facility including gross daily production, internal energy usage, electricity produced for 3rd parties, net biogas delivered to the pipeline and fertilizer production user. A baseline study will be made to establish the current environmental status of the bay and to monitor changes. Also, the main characteristics of the biogas produced shall be recorded and the flare usage. Next to this, financial parameters shall be recorded (OPEX, actual CAPEX) to have a full ex-post report of the biogas facility useful for replication efforts. The GHG impact of the biogas plant will be based on AMSIIIH. The sludge treatment and usage will be specifically monitored including the depth of the lagoon. While the project primarily focuses on technology change rather than behavioural change (usage of biomethane hybrid buses instead of diesel units), in implementation the project will seek to collect data, including through socioeconomic and users surveys conducted annually, that focuses on infrastructure objectives (e.g. procurement and construction), behavioral changes, as well as climate specific additionalities attributable to incremental investment from GCF proceeds including through causality based impact assessment to determine how the BRT effects the general population and brings about positive change.

ANNEXES


I

Support Documents:

File 1: ADB (2018), Project Administration Manual (PAM): Islamic Republic of Pakistan: Karachi Bus Rapid Transit Project

File 2: Q. Zaman et.al. (2017), Climate Risk and Vulnerability Assessments Study of Karachi Bus Rapid Transit (BRT) System

File 3: Grutter Consulting (2018), GHG and Air Quality Impact of the BRT Karachi and Assessment of Technology options for BRT Buses

File 4: ADB (no date), Summary Poverty Reduction and Social Strategy Karachi BRT Project

File 5: ADB (no date), Gender Action Plan Karachi BRT Project

File 6: Grutter Consulting (2018), LCB Tool Karachi

File 7: ADB (no date) Economic and Financial Analysis Karachi BRT Project

File 8a: ADB (2018), Proposed Loan Islamic Republic of Pakistan: Karachi Bus Rapid Transit Project

File 8b: Logit (2018), Karachi Bus Rapid Transit Project Operational Plan Report PC-1

File 8c: Government of Sindh (2018), Modified PC-1 Construction of BRT Red Line Project

File 9: ADB (2018), Environmental Impact Assessment

File 10: S. Peters (2018), Summarized Technical Note: Behns Colony Biomethane Project Karachi, Sindh Province, Pakistan

File 11: ADB (2017), Promoting Sustainable Transport Through Improving Nonmotorized Transport TA-8168-REG

File 12: MM Pakistan (2018), Incremental Cost of Infrastructure for Adaptation Needs

File 13: M Pakistan (2018), Technical Note Karachi Red Line BRT Pavement Options

File 14: Map BRT Karachi

I. Supporting Documents for Funding Proposal

☐ NDA No-objection Letter ☒ Feasibility Study ☒ Integrated Financial Model that provides sensitivity analysis of critical elements (xls format, if applicable) ☐ Confirmation letter or letter of commitment for co-financing commitment (If applicable) ☐ Project/Programme Confirmation/Term Sheet (including cost/budget breakdown, disbursement schedule, etc.) – see the Accreditation Master Agreement, Annex I ☒ Environmental and Social Impact Assessment (ESIA) or Environmental and Social Management Plan (If applicable) ☒ Appraisal Report or Due Diligence Report with recommendations(If applicable) ☐ Evaluation Report of the baseline project(If applicable) ☒ Map indicating the location of the project/programme ☒ Timetable of project/programme implementation

ANNEXES


I File 15: Field E. and Vyborny K. (2014), Female Labor Force Participation in Asia: Pakistan Country Study

File 16: ADB (2014), PAK: Rapid Assessment of Sexual Harassment in Public Transport and Connected Spaces in Karachi

File 17: ADB (2018), Financial model